10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

Form 10-Q

 _____________________________________________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-33462

_____________________________________________________

INSULET CORPORATION

(Exact name of Registrant as specified in its charter)

_____________________________________________________

Delaware	04-3523891
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
600 Technology Park Drive, Suite 200 Billerica, Massachusetts	01821
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (978) 600-7000

_____________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes xNo¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).YesxNo¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	x		Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes¨Nox

As of August 2, 2016, the registrant had 57,267,862 shares of common stock outstanding.

INSULET CORPORATION

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED

June 30, 2016

Table Of Contents

PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)	3
Consolidated Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015 (Unaudited)	3
Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015 (Unaudited)	4
Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2016 and 2015 (Unaudited)	5
Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015 (Unaudited)	6
Condensed Notes to Consolidated Financial Statements (Unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	35
Item 4. Controls and Procedures	35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3. Defaults Upon Senior Securities	36
Item 4. Mine Safety Disclosures	36
Item 5. Other Information	36
Item 6. Exhibits	37
Signatures	38

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

INSULET CORPORATION

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30, 2016			December 31, 2015
(In thousands, except share data)
ASSETS
Current Assets
Cash and cash equivalents	$	75,661		$	122,672
Short-term investments	35,605			—
Accounts receivable, net (Note 9)	38,700			42,530
Inventories, net (Note 10)	24,486			12,024
Prepaid expenses and other current assets	6,838			4,283
Current assets of discontinued operations (Note 3)	—			9,252
Total current assets	181,290			190,761
Property and equipment, net (Note 2)	41,131			41,793
Other intangible assets, net (Note 11)	773			933
Goodwill	39,763			39,607
Other assets	88			76
Long-term assets of discontinued operations (Note 3)	—			1,956
Total assets	$	263,045		$	275,126
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	21,605		$	15,213
Accrued expenses and other current liabilities (Note 12)	29,938			36,744
Deferred revenue	1,323			2,361
Current portion of capital lease obligations	2,315			5,519
Current liabilities of discontinued operations (Note 3)	—			5,319
Total current liabilities	55,181			65,156
Capital lease obligations	—			269
Long-term debt, net of discount	175,690			171,698
Other long-term liabilities	4,730			3,952
Total liabilities	235,601			241,075
Commitments and contingencies (Note 13)
Stockholders’ Equity
Preferred stock, $.001 par value:
Authorized: 5,000,000 shares at June 30, 2016 and December 31, 2015. Issued and outstanding: zero shares at June 30, 2016 and December 31, 2015.	—			—
Common stock, $.001 par value:
Authorized: 100,000,000 shares at June 30, 2016 and December 31, 2015. Issued and outstanding: 57,240,894 and 56,954,830 shares at June 30, 2016 and December 31, 2015, respectively.	57			57
Additional paid-in capital	695,854			686,193
Accumulated other comprehensive loss	(243		)	(654		)
Accumulated deficit	(668,224		)	(651,545		)
Total stockholders’ equity	27,444			34,051
Total liabilities and stockholders’ equity	$	263,045		$	275,126

The accompanying condensed notes are an integral part of these consolidated financial statements.

3

INSULET CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except share and per share data)	2016			2015			2016			2015
Revenue	$	87,330		$	60,551		$	168,543		$	108,699
Cost of revenue	36,873			30,036			74,035			48,991
Gross profit	50,457			30,515			94,508			59,708
Operating expenses:
Research and development	12,953			12,069			25,942			20,276
Sales and marketing	22,950			19,008			46,972			33,718
General and administrative	15,842			13,497			30,581			27,039
Total operating expenses	51,745			44,574			103,495			81,033
Operating loss	(1,288		)	(14,059		)	(8,987		)	(21,325		)
Interest expense	3,127			3,221			6,223			6,400
Other income, net	129			28			299			55
Interest expense and other income, net	(2,998		)	(3,193		)	(5,924		)	(6,345		)
Loss from continuing operations before income taxes	(4,286		)	(17,252		)	(14,911		)	(27,670		)
Income tax expense	65			15			129			39
Net loss from continuing operations	$	(4,351	)	$	(17,267	)	$	(15,040	)	$	(27,709	)
Income (loss) from discontinued operations, net of tax ($0 and $22 for the three months ended June 30, 2016 and 2015, respectively and $408 and $50 for the six months ended June 30, 2016 and 2015, respectively.	153			1,835			(1,639		)	443
Net loss	$	(4,198	)	$	(15,432	)	$	(16,679	)	$	(27,266	)
Net loss per share basic and diluted
Net loss from continuing operations per share basic and diluted	$	(0.08	)	$	(0.30	)	$	(0.26	)	$	(0.49	)
Net income (loss) from discontinued operations per share basic and diluted	$	—		$	0.03		$	(0.03	)	$	0.01
Weighted-average number of shares used in calculating net loss per share	57,195,963			56,808,489			57,112,769			56,653,430

The accompanying condensed notes are an integral part of these consolidated financial statements.

4

INSULET CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2016			2015			2016			2015
Net loss	$	(4,198	)	$	(15,432	)	$	(16,679	)	$	(27,266	)
Other comprehensive income, net of tax
Foreign currency translation adjustment, net of tax	3			—			403			3
Unrealized gain on available-for-sale securities	8			—			8			—
Total other comprehensive income, net of tax	11			—			411			3
Total comprehensive loss	$	(4,187	)	$	(15,432	)	$	(16,268	)	$	(27,263	)

The accompanying condensed notes are an integral part of these consolidated financial statements.

5

INSULET CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June 30,
(In thousands)	2016			2015
Cash flows from operating activities
Net loss	$	(16,679	)	$	(27,266	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	6,845			7,114
Non-cash interest	3,992			3,789
Stock-based compensation expense	10,784			9,630
Provision for bad debts	1,074			1,180
Other	132			—
Changes in operating assets and liabilities:
Accounts receivable	3,672			6,876
Inventories	(13,099		)	(10,336		)
Prepaid expenses and other assets	(2,205		)	632
Accounts payable, accrued expenses and other current liabilities	(1,097		)	4,997
Deferred revenue	(1,020		)	534
Other long-term liabilities	765			147
Net cash used in operating activities	(6,836		)	(2,703		)
Cash flows from investing activities
Purchases of property and equipment	(5,905		)	(4,601		)
Purchases of short-term investments	(35,597		)	—
Proceeds from divestiture of business, net (Note 3)	5,714			—
Net cash used in investing activities	(35,788		)	(4,601		)
Cash flows from financing activities
Principal payments of capital lease obligations	(3,472		)	(2,814		)
Proceeds from issuance of common stock, net of offering costs	1,490			6,489
Payment of withholding taxes in connection with vesting of restricted stock units	(2,610		)	(2,427		)
Net cash (used in) provided by financing activities	(4,592		)	1,248
Effect of exchange rate changes on cash	205			—
Net decrease in cash and cash equivalents	(47,011		)	(6,056		)
Cash and cash equivalents, beginning of period	122,672			151,193
Cash and cash equivalents, end of period	$	75,661		$	145,137
Non-cash investing and financing activities
Purchases of property and equipment under capital lease	$	—		$	5,721

The accompanying condensed notes are an integral part of these consolidated financial statements.

6

INSULET CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Nature of the Business

Insulet Corporation, the "Company," is primarily engaged in the development, manufacturing and sale of its proprietary Omnipod Insulin Management System (the “Omnipod System”), an innovative, discreet and easy-to-use insulin infusion system for people with insulin-dependent diabetes. The Omnipod System features a small, lightweight, self-adhesive disposable tubeless Omnipod device which is worn on the body for approximately three days at a time and its wireless companion, the handheld PDM. Conventional insulin pumps require people with insulin-dependent diabetes to learn to use, manage and wear a number of cumbersome components, including up to 42 inches of tubing. In contrast, the Omnipod System features only two discreet, easy-to-use devices that eliminate the need for a bulky pump, tubing and separate blood glucose meter, provides for virtually pain-free automated cannula insertion, communicates wirelessly and integrates a blood glucose meter.

The Company acquired Neighborhood Holdings, Inc. and its wholly-owned subsidiaries (collectively, “Neighborhood Diabetes”) in June 2011. Through Neighborhood Diabetes, the Company provided customers with blood glucose testing supplies, traditional insulin pumps, pump supplies and pharmaceuticals and had the ability to process claims as either durable medical equipment or through pharmacy benefits. In February 2016, the Company sold Neighborhood Diabetes to Liberty Medical LLC ("Liberty Medical"). Additional information regarding the disposition and treatment of the Neighborhood Diabetes business as discontinued operations is provided in note 3 to the consolidated financial statements included in this Form 10-Q.

Commercial sales of the Omnipod System began in the United States in 2005. The Company sells the Omnipod System and other diabetes management supplies in the United States through direct sales to customers or through its distribution partners. The Omnipod System is currently available in multiple countries in Europe, Canada and Israel.

In addition to using the Pod for insulin delivery, the Company also partners with global pharmaceutical and biotechnology companies to tailor the Omnipod technology platform for the delivery of subcutaneous drugs across multiple therapeutic areas.    

In July 2015, the Company executed an asset purchase agreement whereby it acquired the Canadian Omnipod distribution operations from GlaxoSmithKline ("GSK"). With the acquisition, the Company assumed all distribution, sales, marketing, training and support activities for the Omnipod system in Canada.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016, or for any other subsequent interim period.

The unaudited consolidated financial statements in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with 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. The most significant estimates used in these financial statements include the valuation of stock-based compensation expense, acquired businesses, accounts receivable, inventories, goodwill, deferred revenue, equity instruments, the lives of property and equipment and intangible assets, as well as warranty and doubtful accounts allowance reserve calculations. Actual results may differ from those estimates.

Foreign Currency Translation

7

For foreign operations, asset and liability accounts are translated at exchange rates as of the balance sheet date; income and expenses are translated using weighted average exchange rates for the reporting period. Resulting translation adjustments are reported in accumulated other comprehensive loss, a separate component of stockholders' equity. Gains and losses arising from transactions and translation of period-end balances denominated in currencies other than the functional currency, primarily the Canadian dollar, are included in other income, net, and were not material in the three and six months ended June 30, 2016 and 2015.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

For the purpose of the financial statement classification, the Company considers all highly-liquid investment instruments with original maturities of 90 days or less, when purchased, to be cash equivalents. Cash equivalents include money market mutual funds, corporate bonds, U.S. government and agency bonds and certificates of deposit which are carried at their fair value. Outstanding letters of credit, related to security deposits for lease obligations, totaled $1.2 million as of June 30, 2016 and December 31, 2015.

Investments

Investment securities consist of available-for-sale marketable securities and are carried at fair value with unrealized gains or losses included as a component of other comprehensive loss in shareholders' equity. Investments, exclusive of cash equivalents, with a stated maturity date of one year or less from the balance sheet date or that are expected to be used in current operations, are classified as short-term investments.

The Company reviews investments for other-than-temporary impairment when the fair value of an investment is less than its amortized cost. If an available-for-sale security is other than temporarily impaired, the loss is charged to either earnings or shareholders' equity depending on the Company's intent and ability to retain the security until the full cost basis can be recovered.

Property and Equipment

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the respective assets. Leasehold improvements are amortized over their useful life or the life of the lease, whichever is shorter. Assets acquired under capital leases are amortized in accordance with the respective class of owned assets and the amortization is included with depreciation expense. Maintenance and repair costs are expensed as incurred.

Property and equipment included $34.8 million and $28.2 million of accumulated depreciation as of June 30, 2016 and December 31, 2015, respectively.

Goodwill

Goodwill represents the excess of the cost of acquired businesses over the fair value of identifiable net assets acquired. The Company follows the provisions of Financial Accounting Standards Board ("FASB") ASC 350-20, Intangibles - Goodwill and Other (“ASC 350-20”). The Company performs an assessment of its goodwill for impairment on at least an annual basis or whenever events or changes in circumstances indicate there might be impairment. The Company's annual impairment test date is October 1st.

As the Company operates in one segment, the Company has considered whether that segment contains multiple reporting units. The Company has concluded that there is a single reporting unit as the Company does not have segment managers and discrete financial information below consolidated results is not reviewed on a regular basis. Based on this conclusion, goodwill was tested for impairment at the enterprise level. The Company has the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of its sole reporting unit is less than its carrying amount. This qualitative analysis is used as a basis for determining whether it is necessary to perform the two-step goodwill impairment analysis. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the two-step goodwill impairment test will be performed. The first step compares the carrying value of the reporting unit to its fair value using a discounted cash flow analysis. If the reporting unit’s carrying value exceeds its fair value, the Company would record an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value. There was no impairment of goodwill during the three and six months ended June 30, 2016 and 2015.

8

Revenue Recognition

The Company generates most of its revenue from global sales of the Omnipod System. Revenue also includes sales of devices based on the Omnipod technology platform to global pharmaceutical and biotechnology companies for the delivery of subcutaneous drugs across multiple therapeutic areas.

Revenue recognition requires that persuasive evidence of a sales arrangement exists, delivery of goods occurs through transfer of title and risk and rewards of ownership, the selling price is fixed or determinable and collectability is reasonably assured. With respect to these criteria:

• The evidence of an arrangement generally consists of a physician order form, a patient information form and, if applicable, third-party insurance approval for sales directly to patients or a purchase order for sales to a third-party distributor.

• Transfer of title and risk and rewards of ownership are passed to the patient or third-party distributor upon shipment of the products.

• The selling prices for all sales are fixed and agreed with the patient or third-party distributor and, if applicable, the patient’s third-party insurance provider(s) prior to shipment and are based on established list prices or, in the case of certain third-party insurers, contractually agreed upon prices. Provisions for discounts, rebates and other adjustments to customers are established as a reduction to revenue in the same period the related sales are recorded.

The Company offers a 45-day right of return for sales of its Omnipod System in the United States, and a 90-day right of return for sales of its Omnipod System in Canada to patients and defers revenue to reflect estimated sales returns in the same period that the related product sales are recorded. Returns are estimated through a comparison of the Company’s historical return data to its related sales. Historical rates of return are adjusted for known or expected changes in the marketplace. When doubt exists about reasonable assuredness of collectability from specific customers, the Company defers revenue from sales of products to those customers until payment is received.

As of June 30, 2016 and December 31, 2015, the Company had deferred revenue of $1.7 million and $2.5 million, respectively, which included $0.4 million and $0.2 million classified in other long-term liabilities in each period as of June 30, 2016 and December 31, 2015, respectively. Deferred revenue primarily relates to undelivered elements on certain arrangements within the Company's developmental arrangements and other instances where the Company has not yet met the revenue recognition criteria.

Shipping and Handling Costs

The Company does not typically charge its customers for shipping and handling costs associated with shipping its product to its customers. These shipping and handling costs are included in general and administrative expenses and were $0.7 million and $0.6 million for the three months ended June 30, 2016 and 2015, respectively and were $1.7 million and $1.0 million for the six months ended June 30, 2016 and 2015.

Concentration of Credit Risk

Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents and accounts receivable. The Company maintains the majority of its cash with two financial institutions.

The Company purchases Omnipods from Flextronics International Ltd., its single source supplier. As of June 30, 2016 and December 31, 2015, liabilities to this vendor represented approximately 34% and 28% of the combined balance of accounts payable, accrued expenses and other current liabilities, respectively.

Revenue for customers comprising more than 10% of total revenue were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
Amgen, Inc.	16%	12%	17%	11%
Ypsomed Distribution AG	15%	10%	15%	*
RGH Enterprises, Inc.	11%	14%	11%	13%

^{* Customer represents less than 10% of revenue for the period.} 

Reclassification of Prior Period Balance

9

Certain reclassifications have been made to prior periods amounts to conform to the current period financial statement presentation including adjusting footnotes within to reflect the presentation of discontinued operations. These reclassifications have no effect on previously reported net loss.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 requires that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Under this guidance, a company makes additional estimates regarding performance conditions and the allocation of variable consideration. The guidance is effective in fiscal years beginning January 1, 2018, with early adoption permitted. The Company is currently evaluating the impact of ASU 2014-09. The Company has not yet selected a transition method nor has it determined the effect of the standard on its consolidated financial position and results of operations.

In June 2014, the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments when the terms of an award provide that a performance target could be achieved after the requisite service period ("ASU 2014-12"). ASU 2014-12 clarifies the period over which compensation cost would be recognized in awards with a performance target that affects vesting and that could be achieved after the requisite service period. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective in fiscal years beginning after January 1, 2016, with early adoption permitted. The Company has adopted ASU 2014-12 on January 1, 2016 and its adoption did not have an impact on the consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements- Going Concern ("ASU 2014-15"). ASU No. 2014-15 requires management to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.  The new standard is effective for fiscal years ending after December 15, 2016 and interim periods within annual periods beginning after 15 December 2016.  Early adoption is permitted. The Company concluded, that if this standard had been adopted as of June 30, 2016 substantial doubt about the Company’s ability to continue as a going concern would not exist.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 amends existing guidance and requires entities to measure most inventory at the lower of cost and net realizable value. The guidance is effective prospectively for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. Upon adoption, entities must disclose the nature of and reason for the accounting change. The Company is currently evaluating the impact of ASU 2015-11.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations,Simplifying the Accounting for Measurement Period Adjustments ("ASU 2015-16"). ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date. The guidance is effective in 2016 for calendar year-end public entities. Early adoption is permitted. The Company has adopted ASU 2015-16 on January 1, 2016 and its adoption did not have an impact on the consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update 2016-01 ("ASU 2016-01"), Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 changes the current GAAP model for the accounting of equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. All equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value through earnings. There will no longer be an available-for-sale classification (changes in fair value reported in other comprehensive income (loss)) for equity securities with readily determinable fair values. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The classification and measurement guidance will be effective in fiscal years beginning after December 15, 2017, and interim periods within those years. The Company is currently evaluating the impact of ASU 2016-01.

In February 2016, the FASB issued ASU No. 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize the assets and liabilities on their balance sheet for the rights and obligations created by most leases and continue to recognize expenses on their income statements over the lease term.  It will also require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-02.

10

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those years. Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-09.

Other Significant Policies:

The following table identifies the Company's other significant accounting policies and the note and page where a detailed description of each policy can be found.

Fair Value Measurements	Note	4	Page	13
Accounts Receivable and Allowance for Doubtful Accounts	Note	9	Page	19
Inventories	Note	10	Page	19
Other Intangible Assets	Note	11	Page	20
Product Warranty Costs	Note	12	Page	21
Equity- Stock-Based Compensation	Note	14	Page	22
Income Taxes	Note	15	Page	24
Segment Reporting	Note	16	Page	25

11

Note 3. Discontinued Operations

Beginning in the first quarter of 2016, the results of operations, assets, and liabilities of Neighborhood Diabetes, are classified as discontinued operations for all periods presented, except for certain corporate overhead costs which remain in continuing operations.

In February 2016, the Company sold Neighborhood Diabetes to Liberty Medical LLC (Liberty Medical) for approximately $6.2 million in cash, which included $1.2 million of closing adjustments finalized in June 2016 and paid by Liberty Medical.

In connection with the 2016 disposition, the Company entered into a transition services agreement pursuant to which Insulet is providing various services to Liberty Medical on an interim transitional basis. The services generally commenced on the separation date and terminate six months following the closing. Services provided by Insulet include certain information technology and back office support. The charges for such services are generally intended to allow the service provider to recover all out-of-pocket costs. Billings by Insulet under the transition services agreement are recorded as a reduction of the costs to provide the respective service in the applicable expense category in the consolidated statements of operations. This transitional support is to provide Liberty Medical the time required to establish its stand-alone processes for such activities that were previously provided by Insulet as described above and does not constitute significant continuing support of Liberty Medical's operations. Total expenses incurred for such transition services, which will be reimbursed in full, were $0.4 million and $0.7 million for the three and six months ended June 30, 2016.

Following the disposition, the Company entered into a distribution agreement with the Neighborhood Diabetes subsidiary of Liberty Medical to continue to act as a distributor for the Company's products. For the three months ended June 30, 2016 and 2015, revenue from continued operations as presented in the consolidated statement of operations include $0 and $0.7 million, respectively of Omnipod sales transacted through Neighborhood Diabetes prior to the divestiture that were previously eliminated in consolidation and were $0.3 million and $1.2 million for the six months ended June 30, 2016 and 2015, respectively. These amounts were historically reported in the Neighborhood Diabetes revenue results and are being presented based on current market terms of products sold to the Neighborhood Diabetes subsidiary of Liberty Medical.

Post divestiture, Omnipod sales to the Neighborhood Diabetes subsidiary of Liberty Medical were $0.1 million and $0.4 million for the three and six months ended June 30, 2016, respectively.

The following is a summary of the operating results of Neighborhood Diabetes included in discontinued operations for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2016			2015		2016			2015
Discontinued operations:
Revenue (1)	$	—		$	15,037	$	7,730		$	28,104
Cost of revenue	—			11,177		5,369			20,630
Gross profit	—			3,860		2,361			7,474
Operating and other (income) expenses	(153		)	2,003		2,328			6,981
Loss on sale of Neighborhood Diabetes	—			—		1,264			—
Income (loss) from discontinued operations before taxes	153			1,857		(1,231		)	493
Income tax expense	—			22		408			50
Net income (loss) from discontinued operations(2)	$	153		$	1,835	$	(1,639	)	$	443

⁽¹⁾  Revenue for the three and six months ending June 30, 2016 includes revenue from the operations of Neighborhood Diabetes through date of sale in February 2016.

⁽²⁾  Income from discontinued operations for the three and six months ended June 30, 2015 resulted from a $2.7 million reduction in a previously recorded liability associated with sales and use tax audits based on final settlement in the second quarter of 2015.

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The following is a summary of the Neighborhood Diabetes assets and liabilities presented as discontinued operations as of December 31, 2015:

	December 31, 2015
(In thousands)
ASSETS
Accounts receivable, net	$	5,857
Inventories, net	2,019
Prepaid expenses and other current assets	1,376
Current assets of discontinued operations	9,252
Intangible assets, net	1,788
Goodwill	140
Other non-current assets	28
Long-term assets of discontinued operations	1,956
Total assets of discontinued operations	$	11,208
LIABILITIES
Accounts payable	$	3,436
Accrued expenses and other current liabilities	1,883
Current liabilities of discontinued operations	5,319
Total liabilities of discontinued operations	$	5,319

Net operating cash flows provided by discontinued operations in the three months ended June 30, 2016 and 2015, were $0 and $0.5 million, respectively. Net operating cash flows used in discontinued operations in the six months ended June 30, 2016 and 2015 were $2.0 million and $0.9 million, respectively.

Note 4. Fair Value Measurements

The Company adopted the FASB Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”) related to the fair value measurement of certain of its assets and liabilities. ASC 820 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. When estimating fair value, depending on the nature and complexity of the asset or liability, the Company may use one or all of the following approaches:

• Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.

• Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance for functional and/or economic obsolescence.

• Income approach, which is based on the present value of the future stream of net cash flows.

To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, as described in ASC 820, of which the first two are considered observable and the last unobservable:

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 in which there is little or no market data available, which require the reporting entity to develop its own assumptions

Certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other liabilities are carried at cost, which approximates their fair value because of the short-term maturity of these financial instruments.

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The following table provides a summary of assets that are measured at fair value as of June 30, 2016, and December 31, 2015, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
June 30, 2016
Recurring fair value measurements:
Cash equivalents:
Money market mutual funds	$	41,297	$	41,297	$	—	$	—
Corporate bonds	5,574		—		5,574		—
U.S. government and agency bonds	4,998		—		4,998		—
Certificates of deposit	2,205		2,205		—		—
Total cash equivalents	$	54,074	$	43,502	$	10,572	$	—
Short-term investments:
U.S. government and agency bonds	$	13,784	$	10,022	$	3,762	$	—
Corporate bonds	11,824		—		11,824		—
Certificates of deposit	9,997		9,997		—		—
Total short-term investments	$	35,605	$	20,019	$	15,586	$	—
December 31, 2015
Recurring fair value measurements:
Cash equivalents:
Money market mutual funds	$	98,223	$	98,223	$	—	$	—
Non-recurring fair value measurements:
Long-lived assets held and used(1)	$	1,788	$	—	$	—	$	1,788

⁽¹⁾  Long-lived assets held and used relate to the asset group of the Neighborhood Diabetes business which consists of definite lived intangible assets and property and equipment. During the fourth quarter of 2015, the Company recognized an impairment charge on this asset group totaling $9.1 million, which represented the difference between the fair value of the asset group and the carrying value. As a result of the impairment, the asset group was recorded at fair value as of December 31, 2015. The fair value for the asset group was determined using the direct cash flows expected to be received from the disposition of the asset group, which was completed in February 2016 (level 3 input).    

Debt

The estimated fair value of debt is based on the Level 2 quoted market prices for the same or similar issues and included the impact of the conversion features.

The carrying amounts and the estimated fair values of financial instruments as of June 30, 2016, and December 31, 2015, are as follows (in thousands):

	June 30, 2016				December 31, 2015
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
2% Convertible senior notes	$	175,690	$	191,391	$	171,698	$	207,882

The Company issued $201.3 million in principal amount of 2% Notes (as defined below) in June 2014. The carrying value of the 2% Notes at June 30, 2016 includes a debt discount of $22.3 million which is being amortized as non-cash interest expense over the term of the 2% Notes. The decrease in the estimated fair values of these liabilities from December 31, 2015 to June 30, 2016 represents the impact of the quoted bond prices at those dates.

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5. Short-term Investments

The Company's short-term investments are classified as available-for-sale and amortized costs, gross unrealized holding gains and losses, and fair values at June 30, 2016 are as follows (in thousands) and the Company did not have any short-term investments at December 31, 2015:

	Amortized cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2016
U.S. government and agency bonds	$	13,777	$	7	$	—		$	13,784
Corporate bonds	11,823		2		(1		)	11,824
Certificates of deposit	9,997		—		—			9,997
Total short-term investments	$	35,597	$	9	$	(1	)	$	35,605

Note 6. Debt

The Company had outstanding convertible debt and related deferred financing costs on its consolidated balance sheet as follows (in thousands):

	June 30, 2016			December 31, 2015
Principal amount of the 2% Convertible Senior Notes	$	201,250		$	201,250
Unamortized debt discount	(22,275		)	(25,704		)
Deferred financing costs	(3,285		)	(3,848		)
Long-term debt, net of discount	$	175,690		$	171,698

Interest expense related to the 2% Notes was included in interest and other expense on the consolidated statements of operations as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Contractual coupon interest	$	1,007	$	1,006	$	2,013	$	2,012
Accretion of debt discount	1,727		1,625		3,429		3,226
Amortization of debt issuance costs	281		281		563		563
Total interest and other expense	$	3,015	$	2,912	$	6,005	$	5,801

3.75% Convertible Senior Notes

In June 2011, the Company sold $143.8 million in principal amount of 3.75% Convertible Senior Notes due June 15, 2016 (the "3.75% Notes"). The interest rate on the notes was 3.75% per annum, payable semi-annually in arrears in cash on December 15 and June 15 of each year. The 3.75% Notes were convertible into the Company’s common stock at an initial conversion rate of 38.1749 shares of common stock per $1,000 principal amount of the 3.75% Notes, which was equivalent to a conversion price of approximately $26.20 per share.

In connection with the issuance of the 3.75% Notes, the Company repurchased $70 million in principal amount of its 5.375% Convertible Senior Notes due June 15, 2013 (the "5.375% Notes") for $85.1 million, a 21.5% premium on the principal amount. The investors that held the $70 million in principal amount of repurchased 5.375% Notes purchased $59.5 million in principal amount of the 3.75% Notes and retained approximately $13.5 million in principal amount of the remaining 5.375% Notes. These investors’ combined $73.0 million in principal amount of convertible debt ($13.5 million of 5.375% Notes and $59.5 million of 3.75% Notes) was considered to be a modification of a portion of the 5.375% Notes and was accounted for separately from the issuance of the remainder of the 3.75% Notes.

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The Company recorded a total debt discount of $25.8 million related to the modified debt. This discount consisted of $10.5 million related to the remaining debt discount on the $70 million in principal amount of 5.375% Notes repurchased, $15.1 million related to the premium payment in connection with the repurchase and $0.2 million related to the increase in the value of the conversion feature. The total debt discount was being amortized as non-cash interest expense at the effective rate of 16.5% over the five year term of the modified debt. Additionally, the Company paid transaction fees of approximately $2.0 million related to the modification, which were recorded as interest and other expense at the time of the modification.

Of the $143.8 million in principal amount of 3.75% Notes issued in June 2011, $84.3 million in principal amount was considered to be an issuance of new debt. The Company recorded a debt discount of $26.6 million related to the $84.3 million in principal amount of 3.75% Notes. The debt discount was recorded as additional paid-in capital to reflect the value of its nonconvertible debt borrowing rate of 12.4% per annum and was being amortized as non-cash interest expense over the five year term of the 3.75% Notes. The Company incurred deferred financing costs related to this offering of approximately $2.8 million, of which $0.9 million has been reclassified as an offset to the value of the amount allocated to equity. The remainder was recorded as other assets in the consolidated balance sheet and was being amortized as non-cash interest expense over the five year term of the 3.75% Notes.

In June 2014, in connection with the issuance of $201.3 million in principal amount of 2% Convertible Senior Notes due June 15, 2019 (the “2% Notes”), the Company repurchased approximately $114.9 million in principal amount of the 3.75% Notes for $160.7 million, a premium of $45.8 million over the principal amount. Investors that held approximately $80.0 million of 3.75% Notes purchased approximately $98.2 million in principal amount of the 2% Notes. The repurchase of the 3.75% Notes was treated as an extinguishment of debt since the fair value of the conversion feature changed by more than 10%. The extinguishment of the 3.75% Notes was accounted for separately from the issuance of the 2% Notes. The $160.7 million paid to extinguish the debt was allocated to debt and equity based on their respective fair values immediately prior to the transaction. The Company allocated $112.4 million of the payment to the debt and $48.3 million to equity.

The 3.75% Notes were convertible at the option of the holder during the quarter ended June 30, 2014 since the last reported sales price per share of the Company's common stock was equal to or greater than 130% of the conversion price for at least 20 of the 30 trading days ended on March 31, 2014. The 3.75% Notes and any unpaid interest were convertible at the Company’s option for cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock.

Beginning on June 20, 2014, the Company had the right to redeem the 3.75% Notes, at its option, in whole or in part, if the last reported sale price per share of the Company’s common stock was at least 130% of the conversion price then in effect for at least 20 trading days during a period of 30 consecutive trading days. In June 2014, the Company met the redemption requirements and notified holders of its intent to redeem the outstanding $28.8 million in principal amount of 3.75% Notes in July 2014. Prior to the redemption date, holders of $28.5 million in principal amount of 3.75% Notes exercised their right to convert their outstanding 3.75% Notes. The Company settled this conversion of the 3.75% Notes in July 2014 by providing cash of $28.5 million for the principal amount of the outstanding 3.75% Notes converted and issuing 348,535 shares of common stock for the conversion premium totaling $12.6 million, for a total consideration paid of $41.1 million. The Company settled the redemption of the remaining $0.3 million in principal amount in exchange for a cash payment of $0.3 million representing principal and accrued and unpaid interest. The Company allocated $27.9 million of the total consideration paid to the debt and $13.5 million to equity.

The Company recorded a loss on extinguishment of debt of $23.2 million in connection with the repurchase and redemption of the 3.75% Notes during the year ended December 31, 2014, representing the excess of the $140.3 million allocated to the debt over its carrying value, net of deferred financing costs.

Certain features related to a portion of the 3.75% Notes, including the holders’ ability to require the Company to repurchase their notes and the higher interest payments required in an event of default, were considered embedded derivatives and were required to be bifurcated and accounted for at fair value. The Company assessed the value of these embedded derivatives at each balance sheet date.

There was no cash or non-cash interest expense recorded in the six months ended June 30, 2016 and 2015 related to the 3.75% Notes.

As of December 31, 2014, no amounts remain outstanding related to the 3.75% Notes.

2% Convertible Senior Notes

In June 2014, the Company sold $201.3 million in principal amount of the 2% Notes due June 15, 2019. The interest rate on the notes is 2% per annum, payable semi-annually in arrears in cash on June 15 and December 15 of each year. The 2% Notes are convertible into the Company’s common stock at an initial conversion rate of 21.5019 shares of

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common stock per $1,000 principal amount of the 2% Notes, which is equivalent to a conversion price of approximately $46.51 per share, subject to adjustment under certain circumstances.

The Company recorded a debt discount of $35.6 million related to the 2% Notes. The debt discount was recorded as additional paid-in capital to reflect the value of the Company’s nonconvertible debt borrowing rate of 6.2% per annum. This debt discount is being amortized as non-cash interest expense over the five year term of the 2% Notes. The Company incurred deferred financing costs related to this offering of approximately $6.7 million, of which $1.2 million has been reclassified as an offset to the value of the amount allocated to equity. The remainder is recorded as a reduction to debt in the consolidated balance sheet and is being amortized as non-cash interest expense over the five year term of the 2% Notes.

The 2% Notes contain provisions that allow for additional interest to the holders of the Notes upon the failure to timely file documents or reports that the Company is required to file with the SEC. The additional interest is at a rate of 0.25% per annum of the principal amount of the notes outstanding for the first 180 days and 0.50% per annum of the principal amount of the notes outstanding for a period up to 360 days.

If the Company is purchased by a company outside of the U.S., then additional taxes may be required to be paid by the Company under the terms of the 2% Notes.

The Company determined that the higher interest and tax payments required in certain circumstances are considered embedded derivatives and should be bifurcated and accounted for at fair value. The Company assesses the value of the embedded derivatives at each balance sheet date. The derivatives had de minimis value at the balance sheet date.

Cash interest expense related to the 2% Notes was $1.0 million in both the three months ended June 30, 2016 and 2015. Cash interest expense related to the 2% Notes was $2.0 million in both the six months ended June 30, 2016 and 2015.

Non-cash interest expense related to the 2% Notes was $2.0 million and $1.9 million in the three months ended June 30, 2016 and 2015, respectively. Non-cash interest expense related to the 2% Notes was $4.0 million and $3.8 million in the six months ended June 30, 2016 and 2015, respectively.

As of June 30, 2016, the Company included $175.7 million on its balance sheet in long-term debt related to the 2% Notes.

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Note 7. Capital Lease Obligations

As of June 30, 2016, and December 31, 2015, the Company has approximately $13.7 million of manufacturing equipment acquired under capital leases, included in property and equipment. The obligations under the capital leases are being repaid in equal monthly installments over 24 to 36 month terms and include principal and interest payments with an effective interest rate of 13% to 17%.

The assets acquired under capital leases are being amortized on a straight-line basis over five years in accordance with the Company's policy for depreciation of manufacturing equipment. Amortization expense on assets acquired under capital leases is included with depreciation expense. Amortization expense related to these capital leased assets was $0.7 million and $0.6 million in the three months ended June 30, 2016 and 2015, respectively. Amortization expense was $1.4 million and $1.1 million in the six months ended June 30, 2016 and 2015, respectively.

Assets held under capital leases consist of the following (in thousands):

	June 30, 2016			December 31, 2015
Manufacturing equipment	$	13,705		$	13,705
Less: Accumulated amortization	(5,715		)	(4,346		)
Total	$	7,990		$	9,359

The aggregate future minimum lease payments related to these capital leases as of June 30, 2016, are as follows (in thousands):

Years Ending December 31,	Minimum Lease Payments
2016 (remaining)	$	2,116
2017	269
Total future minimum lease payments	$	2,385
Interest expense	70
Total capital lease obligations	$	2,315

The Company recorded $0.1 million and $0.4 million of interest expense on capital leases in the three months ended June 30, 2016 and 2015, respectively. The Company recorded $0.3 million and $0.7 million of interest expense on capital leases in the six months ended June 30, 2016 and 2015, respectively.

Note 8. Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period, excluding unvested restricted common shares. Diluted net loss per share is computed using the weighted average number of common shares outstanding and, when dilutive, potential common share equivalents from options, restricted stock units and warrants (using the treasury-stock method), and potential common shares from convertible securities (using the if-converted method). Because the Company reported a net loss for the three and six months ended June 30, 2016 and 2015, all potential dilutive common shares have been excluded from the computation of the diluted net loss per share for all periods presented, as the effect would have been anti-dilutive.

Potential dilutive common share equivalents consist of the following:

	Three and Six Months Ended June 30,
	2016	2015
2.00% Convertible Senior Notes	4,327,257	4,327,257
Unvested restricted stock units	999,186	948,554
Outstanding options	3,592,064	2,879,370
Total dilutive common shares	8,918,507	8,155,181

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Note 9. Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist of amounts due from third-party payors, patients, third-party distributors and government agencies. The Company records an allowance for doubtful accounts at the time potential collection risk is identified. The Company estimates its allowance based on historical experience, assessment of specific risk, discussions with individual customers or various assumptions and estimates that are believed to be reasonable under the circumstances. The Company believes the reserve is adequate to mitigate current collection risk.

Customers that represented greater than 10% of accounts receivable as of June 30, 2016 and December 31, 2015 were as follows:

	June 30, 2016		December 31, 2015
Amgen, Inc.	21	%	22	%
Ypsomed Distribution AG	17	%	19	%

The components of accounts receivable are as follows (in thousands):

	June 30, 2016			December 31, 2015
Trade receivables	$	42,351		$	46,668
Allowance for doubtful accounts	(3,651		)	(4,138		)
Total accounts receivable	$	38,700		$	42,530

Note 10. Inventories

Inventories are held at the lower of cost or market, determined under the first-in, first-out method, and include the costs of material, labor and overhead. Inventory has been recorded at cost as of June 30, 2016 and December 31, 2015. Work in process is calculated based upon a buildup in the stage of completion using estimated labor inputs for each stage in production. The Company reviews inventories for net realizable value based on quantities on hand and expectations of future use.

The components of inventories are as follows (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	1,262	$	632
Work-in-process	3,522		1,960
Finished goods, net	19,702		9,432
Total inventories	$	24,486	$	12,024

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Note 11. Other Intangible Assets

The Company’s finite-lived intangible assets are stated at cost less accumulated amortization. The Company assesses its intangible and other long-lived assets for impairment whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable. The Company recognizes an impairment loss for intangibles and other finite-lived assets if the carrying amount of a long-lived asset is not recoverable based on its undiscounted future cash flows. Any such impairment loss is measured as the difference between the carrying amount and the fair value of the asset. The estimation of useful lives and expected cash flows requires the Company to make significant judgments regarding future periods that are subject to some factors outside its control. Changes in these estimates can result in significant revisions to the carrying value of these assets and may result in material charges to the results of operations.

The Company recorded $32.9 million of other intangible assets as a result of the acquisition of Neighborhood Diabetes in 2011. In December 2015, the Company completed a long-lived asset impairment test for Neighborhood Diabetes and determined that the carrying value of the long-lived asset group, which included intangible assets, exceeded the undiscounted cash flows expected to be generated from the asset group. The Company compared the fair value of the intangible assets and the related asset group, which was estimated based on the subsequent sales price of the asset group as of February 2016. As a result, an impairment charge of $9.0 million was recorded within general and administrative expenses for the year ended December 31, 2015. The impairment charge was allocated on a pro-rata basis based on the carrying value of the assets within the asset group. As a result, impairment charges of approximately $7.4 million and $1.6 million, respectively, were recorded on the customer relationship and trade name intangible assets. During the three months ended March 31, 2016, the remaining balance of the other intangible assets associated with the acquisition of Neighborhood Diabetes were removed from the balance sheet as part of the divestiture and included in the calculated loss of disposal. No further impairment was recorded upon the sale.

The Company recorded $2.1 million of other intangible assets in 2015 as a result of the July 2015 acquisition of its Canadian distribution business. The Company determined that the estimated useful life of the contractual relationship asset is 5 years and is amortizing the asset based on the expected cash flows of the assets.

The components of other intangible assets are as follows (in thousands):

	June 30, 2016							December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Contractual relationships, net	$	2,067	$	(1,294	)	$	773	$	1,933	$	(1,000	)	$	933
Tradename	—		—			—		—		—			—
Total intangible assets	$	2,067	$	(1,294	)	$	773	$	1,933	$	(1,000	)	$	933

Amortization expense for intangible assets, excluding discontinued operations, was approximately $0.1 million and $0.2 million for the three and six months ended June 30, 2016, respectively. There was no amortization expense, excluding discontinued operations, for the three and six months ended June 30, 2015. Amortization expense is recorded in general and administrative expenses in the consolidated statements of operations.

Amortization expense expected for the next five years and thereafter is as follows (in thousands):

Years Ending December 31,	Contractual Relationships
2016 (remaining)	$	226
2017	187
2018	160
2019	133
2020	67
Thereafter	—
Total	$	773

As of June 30, 2016, the weighted average amortization period of the Company’s intangible assets is approximately 4.5 years.

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Note 12. Accrued Expenses and Other Current Liabilities

The components of accrued expenses and other current liabilities are as follows (in thousands):

	June 30, 2016		December 31, 2015
Employee compensation and related items	$	14,572	$	16,856
Professional and consulting services	4,064		5,654
Suppliers	2,813		4,981
Other	8,489		9,253
Total accrued expenses and other current liabilities	$	29,938	$	36,744

Product Warranty Costs

The Company provides a four-year warranty on its PDMs sold in the United States and a five year warranty on its PDMs sold in Canada and may replace any Omnipods 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. Warranty expense is recorded in cost of goods sold on the statement of operations. As these estimates are based on historical experience, and the Company continues to introduce new products and versions, the Company also considers the anticipated performance of the product over its warranty period in estimating warranty reserves.

A reconciliation of the changes in the Company’s product warranty liability is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Balance at the beginning of the period	$	4,160		$	2,661		$	4,152		$	2,614
Warranty expense	1,112			1,254			2,139			1,721
Warranty claims settled	(978		)	(748		)	(1,997		)	(1,168		)
Balance at the end of the period	$	4,294		$	3,167		$	4,294		$	3,167

The composition of the product warranty liability balance is reported on the Consolidated Balance Sheets as follows (in thousands):

	June 30, 2016		December 31, 2015
Composition of balance:
Short-term	$	1,583	$	1,592
Long-term	2,711		2,560
	$	4,294	$	4,152

Note 13. Commitments and Contingencies

Operating Leases

The Company leases its facilities in Massachusetts, Canada and Singapore. The Company’s leases are accounted for as operating leases. The leases generally provide for a base rent plus real estate taxes and certain operating expenses related to the leases.

Certain of the Company’s operating lease agreements contain scheduled rent increases. Rent expense is recorded using the straight-line method and deferred rent is included in other current and long-term liabilities in the accompanying balance sheets. The Company has considered FASB ASC 840-20, Leases in accounting for these lease provisions.

The aggregate future minimum lease payments related to these leases as of June 30, 2016, are as follows (in thousands):

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Years Ending December 31,	Minimum Lease Payments
2016 (remaining)	$	1,089
2017	2,181
2018	2,162
2019	2,169
2020	2,146
Thereafter	3,934
Total	$	13,681

Legal Proceedings

The Company is in the process of responding to a revised audit report received in December 2015 on behalf of the Centers for Medicare and Medicaid Services and the State of New York alleging overpayment of certain Medicaid claims to Neighborhood Diabetes.  As of December 31, 2015, the Company had determined that it was probable that a loss had been incurred and recorded an aggregate liability of $0.4 million through general and administrative expense as of that date which remains accrued as of June 30, 2016.

In May 2016, the Company reached a settlement agreement for $0.5 million with the Connecticut Department of Social Services Office of Quality Assurance relating to an audit alleging overpayment of certain Medicaid claims to Neighborhood Diabetes. The settlement amount for this audit was consistent with the amount previously accrued.

In April 2016, the Company reached a settlement agreement for $0.5 million with the Massachusetts Department of Revenue for sales and use tax audits related to Insulet Corporation, which resulted in a $0.2 million reduction of the previously recorded liability and a credit to general and administrative expenses during the three months ending March 31, 2016.

Between May 5, 2015 and June 16, 2015, three class action lawsuits were filed by shareholders in the U.S. District Court, Massachusetts, against the Company and certain individual current and former executives of the Company. Two suits subsequently were voluntarily dismissed. Arkansas Teacher Retirement System v. Insulet, et al., 1:15-cv-12345, which remains outstanding, alleges 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. The lawsuit seeks, among other things, compensatory damages in connection with the Company’s allegedly inflated stock price between May 7, 2013 and April 30, 2015, as well as attorneys’ fees and costs. Due in part to the preliminary nature of this matter, the Company currently cannot reasonably estimate a possible loss, or range of loss, in connection with this matter.

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.

Note 14. Equity

The Company accounts for stock-based compensation under the provisions of FASB ASC 718-10, Compensation — Stock Compensation (“ASC 718-10”), which requires all share-based payments to employees, including grants of employee stock options and restricted stock units, to be recognized in the income statement based on their fair values. Share-based payments that contain performance conditions are recognized when such conditions are probable of being achieved.

The Company uses the Black-Scholes option pricing model to determine the weighted-average fair value of options granted. The Company determines the intrinsic value of restricted stock units based on the closing price of its common stock on the date of grant. The Company recognizes the compensation expense of share-based awards on a straight-line basis for awards with only service conditions and on an accelerated method for awards with performance conditions. Compensation expense is recognized over the vesting period of the awards.

The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the stock price and the following assumptions, including expected volatility, expected life of the awards, the risk-free interest rate, and the dividend yield. The expected volatility is computed over expected terms based upon the historical volatility of the Company's stock. The expected life of the awards is estimated based on the midpoint scenario, which combines historical exercise data with hypothetical exercise data for outstanding options. The risk-free interest rate

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assumption is based on observed interest rates appropriate for the terms of the awards. The dividend yield assumption is based on Company history and expectation of paying no dividends. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense recognized in the financial statements is based on awards that are ultimately expected to vest. The Company evaluates the assumptions used to value the awards on a quarterly basis and if factors change and different assumptions are utilized, stock-based compensation expense may differ significantly from what has been recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.

Stock-based compensation expense related to share-based awards recognized in the three months ended June 30, 2016 and 2015 was $5.5 million and $4.3 million, respectively, based upon when the awards are ultimately expected to vest. Stock-based compensation expense related to the share-based awards recognized in the six months ended June 30, 2016 and 2015 was $10.8 million and $9.6 million, respectively, and was also calculated based on when the awards are ultimately expected to vest.

At June 30, 2016, the Company had $48.9 million of total unrecognized compensation expense related to unvested stock options and restricted stock units.

Stock Options

In May 2007, in conjunction with the Company's initial public offering, the Company adopted its 2007 Stock Option and Incentive Plan (the "2007 Plan"). The 2007 Plan was amended and restated in November 2008, May 2012 and May 2015 to provide for the issuance of additional shares and to amend certain other provisions. Under the 2007 Plan, awards may be granted to persons who are, at the time of grant, employees, officers, non-employee directors or key persons (including consultants and prospective employees) of the Company. The 2007 Plan provides for the granting of stock options, restricted stock units, stock appreciation rights, deferred stock awards, restricted stock, unrestricted stock, cash-based awards, performance share awards or dividend equivalent rights. Options granted under the 2007 Plan generally vest over a period of four years and expire ten years from the date of grant. As of June 30, 2016, 4,515,161 shares remain available for future issuance under the 2007 Plan.

The Company awarded 194,500 shares of performance-based incentive stock options in 2015. The stock options were granted under the 2007 Plan and vest over a four year period from the grant date with the potential of an accelerated vesting period pursuant to the achievement of certain performance conditions. Performance awards are amortized over the service period using an accelerated attribution method.

The following summarizes the activity under the Company’s stock option plans in the six months ended June 30, 2016:

	Number of Options (#)		Weighted Average Exercise Price ($)		Aggregate Intrinsic Value ($)
					(In thousands)
Balance, December 31, 2015	2,999,199		$	31.37
Granted	791,652		30.09
Exercised(1)	(64,851	)	16.73		$	997
Canceled	(133,936	)	32.39
Balance, June 30, 2016	3,592,064		$	31.32	$	6,690
Vested, June 30, 2016(2)	1,345,758		$	30.17	$	5,275
Vested and expected to vest, June 30, 2016(2)(3)	3,258,999				$	6,470

⁽¹⁾  The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of the date of exercise and the exercise price of the underlying options.

⁽²⁾  The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of June 30, 2016, and the exercise price of the underlying options.

⁽³⁾  Represents the number of vested options as of June 30, 2016, plus the number of unvested options expected to vest as of June 30, 2016, based on the unvested options outstanding at June 30, 2016, adjusted for the estimated forfeiture.

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At June 30, 2016 there were 3,592,064 options outstanding with a weighted average exercise price of $31.32 and a weighted average remaining contractual life of 8.3 years. At June 30, 2016 there were 1,345,758 options exercisable with a weighted average exercise price of $30.17 and a weighted average remaining contractual life of 7.0 years.

Employee stock-based compensation expense related to stock options in the three months ended June 30, 2016 and 2015 was $2.5 million and $2.0 million, respectively, and was based on awards ultimately expected to vest. Employee stock-based compensation expense related to stock options in the six months ended June 30, 2016 and 2015 was $4.8 million and $5.0 million, respectively, and was based on awards ultimately expected to vest. At June 30, 2016, the Company had $23.1 million of total unrecognized compensation expense related to stock options that will be recognized over a weighted average vesting period of 1.4 years.

Restricted Stock Units

In the six months ended June 30, 2016, the Company awarded 561,801 restricted stock units to certain employees and non-employee members of the Board of Directors, which included 149,256 restricted stock units subject to the achievement of performance conditions (performance-based restricted stock units). The number of performance-based restricted stock units granted during the six months ended June 30, 2016 that are expected to vest may vary based on the Company's quarterly evaluation of the probability of the performance criteria being achieved. The Company recognized stock compensation expense of $0.5 million and $1.2 million in the three and six months ended June 30, 2016 for performance-based restricted stock units that are expected to vest based on its evaluation of the performance criteria at June 30, 2016. No stock compensation expense was recognized in the three and six months ended June 30, 2015 for performance-based restricted stock units. Performance awards are amortized over the service period using an accelerated attribution method. The restricted stock units were granted under the 2007 Plan and vest over a three year period from the grant date.

The restricted stock units granted during the six months ended June 30, 2016 have a weighted average fair value of $29.43 per share based on the closing price of the Company’s common stock on the date of grant and were valued at approximately $16.5 million on their grant date. The Company is recognizing the compensation expense over the vesting period. Approximately $2.4 million and $2.3 million in the three months ended June 30, 2016 and 2015 and $4.8 million and $4.6 million in the six months ended June 30, 2016 and 2015 of stock-based compensation expense related to the vesting of non-performance based restricted stock units was recognized using the straight line method. Approximately $25.8 million of the fair value of the restricted stock units remained unrecognized as of June 30, 2016 and will be recognized over a weighted average period of 1.1 years. Under the terms of the awards, the Company will issue shares of common stock on each of the vesting dates.

The following table summarizes the status of the Company’s restricted stock units in the six months ended June 30, 2016:

	Number of Shares (#)		Weighted Average Grant Date Fair Value ($)
Balance, December 31, 2015	811,965		$	32.30
Granted	561,801		29.43
Vested	(287,059	)	30.69
Forfeited	(87,521	)	33.65
Balance, June 30, 2016	999,186		$	31.05

Employee Stock Purchase Plan

As of June 30, 2016, the Company had no shares contingently issued under the Employee Stock Purchase Plan (“ESPP”). In the three and six month periods ended June 30, 2016 and 2015, the Company recorded less than $0.1 million of stock-based compensation expense related to the ESPP.

Note 15. Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect in the years in which the differences are expected to reverse. The Company reviews its deferred tax assets for recoverability considering historical profitability, projected future taxable income, and the expected timing of the reversals of existing

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temporary differences and tax planning strategies. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company follows the provisions of FASB ASC 740-10, Income Taxes (“ASC 740-10”) on accounting for uncertainty in income taxes recognized in its financial statements. ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In addition, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company recognizes estimated interest and penalties for uncertain tax positions in income tax expense.

The Company files federal, state and foreign tax returns. These returns are generally open to examination by the relevant tax authorities from three to four years from the date they are filed. The tax filings relating to the Company's federal and state tax returns are currently open to examination for tax years 2012 through 2014 and 2010 through 2014, respectively. In addition, the Company has generated tax losses since its inception in 2000. These years may be subject to examination if the losses are carried forward and utilized in future years.

At June 30, 2016 and December 31, 2015, the Company provided a valuation allowance for the full amount of its net deferred tax asset because it is not more likely than not that the future tax benefit will be realized.

Income tax expense, excluding the historical amounts related to discontinued operations, consists of the following (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2016			2015		2016			2015
Current	$	137		$	15	$	212		$	39
Deferred	(72		)	—		(83		)	—
Total	$	65		$	15	$	129		$	39

The Company has generated deferred tax liabilities related to its amortization of acquired goodwill for tax purposes because the goodwill is not amortized for financial reporting purposes. The tax amortization gives rise to a temporary difference and a tax liability, which will only reverse at the time of ultimate disposition or impairment of the underlying goodwill. Due to the uncertain timing of this reversal, the temporary difference cannot be considered as a source of future taxable income for purposes of determining a valuation allowance; therefore, the tax liability cannot be used to offset deferred tax assets.

The Company had no unrecognized tax benefits at June 30, 2016.

16. Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision-maker ("CODM") in deciding how to allocate resources to an individual segment and in assessing performance of the segment. The Company has concluded that their Chief Executive Officer is the CODM as he is the ultimate decision maker for key operating decisions, determining the allocation of resources and assessing the financial performance of the Company. These decisions, allocations and assessments are performed by the CODM using consolidated financial information. Consolidated financial information is utilized by the CODM as the Company’s current product offering primarily consists of the Omnipod System and drug delivery. The Company’s products are relatively consistent and manufacturing is centralized and consistent across product offerings. Based on these factors, key operating decisions and resource allocations are made by the CODM using consolidated financial data and as such the Company has concluded that they operate as one segment.

Worldwide revenue for the Company's products is categorized as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
U.S. Omnipod	$	56,337	$	45,402	$	107,050	$	85,097
International Omnipod	16,559		7,640		31,939		11,420
Drug Delivery	14,434		7,509		29,554		12,182
Total	$	87,330	$	60,551	$	168,543	$	108,699

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Geographic information about revenue, based on the region of the customer's shipping location, is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
United States	$	70,771	$	52,911	$	136,604	$	97,279
All other	16,559		7,640		31,939		11,420
Total	$	87,330	$	60,551	$	168,543	$	108,699

Geographic information about long-lived assets, net, excluding goodwill and other intangible assets is as follows (in thousands):

	June 30, 2016		December 31, 2015
United States	$	14,558	$	13,018
China	26,486		28,638
Other	175		213
Total	$	41,219	$	41,869

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

You should read the following discussion of our financial condition and results of operations in conjunction with our consolidated financial statements and the accompanying condensed notes to those financial statements included in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our 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 our dependence on our principal product, the Omnipod System;

• fluctuations in quarterly results of operations;

• our ability to sustain or reduce production costs and increase customer orders and manufacturing volumes;

• adverse changes in general economic conditions;

• impact of healthcare reform laws;

• our inability to raise additional funds in the future on acceptable terms or at all;

• potential supply problems or price fluctuations with sole source or third-party suppliers on which we are dependent;

• the potential establishment of a competitive bid program;

• failure to retain supplier pricing discounts and achieve satisfactory gross margins;

• failure to retain key supplier and payor partners;

• international business risks;

• our inability to secure and retain adequate coverage or reimbursement for the Omnipod System by third-party payors and potential adverse changes in reimbursement rates or policies relating to the Omnipod System;

• failure to retain key payor partners and their members;

• failure to retain and manage successfully our Medicare and Medicaid business;

• potential adverse effects resulting from competition;

• reliance on information technology systems and our ability to control related risks, including a cyber-attack or other breach or disruption of these systems;

• technological breakthroughs and innovations adversely affecting our business, and our own new product development initiatives may prove to be ineffective or not commercially successful;

• potential termination of our license to incorporate a blood glucose meter into the Omnipod System, or our inability to enter into new license agreements;

• challenges to the further 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 System;

• our products and operations are subject to extensive government regulation, which could restrict our ability to carry on or expand our operations;

• failure of our contract manufacturers or component suppliers to comply with the FDA’s quality system regulations;

• potential adverse impact resulting from a recall, or discovery of serious safety issues, of our products;

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• the potential violation of federal or state laws prohibiting “kickbacks” or protecting the confidentiality of patient health information, or any challenge to or investigation into our practices under these laws;

• product liability lawsuits that may be brought against us;

• reduced retention rates of our customer base;

• unfavorable results of clinical studies relating to the Omnipod System or the products of our competitors;

• potential future publication of articles or announcement of positions by diabetes associations or other organizations that are unfavorable to the Omnipod System;

• the concentration of substantially all of our manufacturing operations at a single location in China and substantially all of our inventory at a single location in Massachusetts;

• our ability to attract and retain personnel;

• our ability to manage our growth;

• 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 price of our common stock;

• risks related to future sales of our common stock or the conversion of any of our 2% Convertible Senior Notes due June 15, 2019;

• potential indemnification obligations in connection with the disposition of our former Neighborhood Diabetes supplies business;

• potential limitations on our ability to use our net operating loss carryforwards; and

• anti-takeover provisions in our organizational documents.

The factors discussed above are not intended to be a complete statement of all risks and uncertainties and should be evaluated with all other risks described in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 29, 2016 in the section entitled “Risk Factors,” and in our 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 our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements.

Executive Level Overview

We are primarily engaged in the development, manufacturing and sale of our proprietary Omnipod System, an innovative, discreet and easy-to-use continuous insulin delivery system for people with insulin-dependent diabetes. The Omnipod System features a small, lightweight, self-adhesive disposable tubeless Omnipod device which is worn on the body for approximately three days at a time and its wireless companion, the handheld PDM. Conventional insulin pumps require people with insulin-dependent diabetes to learn to use, manage and wear a number of cumbersome components, including up to 42 inches of tubing. In contrast, the Omnipod System features only two discreet, easy-to-use devices that eliminate the need for a bulky pump, tubing and separate blood glucose meter, provides for virtually pain-free automated cannula insertion, communicates wirelessly and integrates a blood glucose meter. We believe that the Omnipod System’s unique proprietary design and features allow people with insulin-dependent diabetes to manage their diabetes with unprecedented freedom, comfort, convenience, and ease.

We began commercial sale of the Omnipod System in the United States in 2005. We sell the Omnipod System and other diabetes management supplies in the United States through direct sales to customers or through our distribution partners. The Omnipod System is currently available in multiple countries in Europe, Canada and Israel. In July 2015, we executed an asset purchase agreement with GSK whereby we acquired assets associated with the Canadian distribution of our products and we assumed the distribution, sales, marketing, training and support activities for the Omnipod system in Canada.

In addition to using the Pod for insulin delivery, we also partner with global pharmaceutical and biotechnology companies to tailor the Omnipod technology platform for the delivery of subcutaneous drugs across multiple therapeutic areas.    

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In June 2011, we acquired Neighborhood Diabetes. Through Neighborhood Diabetes, we provided customers with blood glucose testing supplies, traditional insulin pumps, pump supplies and pharmaceuticals and had the ability to process claims as either durable medical equipment or through pharmacy benefits. In February 2016, we sold Neighborhood Diabetes to Liberty Medical. Additional information regarding the disposition and treatment of our Neighborhood Diabetes business as discontinued operations is provided in note 3 to the consolidated financial statements included in this Form 10-Q.

Second Quarter 2016 Revenue Results:

• Total revenue of $87.3 million

◦ U.S. Omnipod revenue of $56.3 million

◦ International Omnipod revenue of $16.6 million

◦ Drug Delivery revenue of $14.4 million

Our long-term financial objective is to achieve and sustain profitable growth. Our efforts in 2016 are focused primarily on the global expansion of our customer base and increasing our operating performance. Achieving these objectives is requiring additional investments in certain personnel and initiatives, as well as enhancements to our manufacturing efficiency and effectiveness. We believe we will continue to incur net losses in the near term in order to achieve these objectives. However, we believe the accomplishment of our near-term objectives will have a positive impact on our financial condition in the future.

Components of Financial Operations

Revenue.  We derive most of our revenue from global sales of the Omnipod System. Our revenue also includes sales of devices based on the Omnipod technology platform to global pharmaceutical and biotechnology companies for the delivery of subcutaneous drugs across multiple therapeutic areas.

Cost of revenue.    Cost of revenue consists primarily of raw material, labor, warranty, inventory reserve and overhead costs such as freight-in and depreciation and the cost of products we acquire from third party suppliers.

Research and development.    Research and development expenses consist primarily of personnel costs and outside services within our product development, regulatory and clinical functions, and product development projects. We generally expense research and development costs as incurred.

Sales and marketing.    Sales and marketing expenses consist primarily of personnel costs within our sales, marketing, reimbursement support, customer care and training functions, sales commissions paid to our sales representatives and costs associated with participation in medical conferences, physician symposia and promotional activities.

General and administrative.    General and administrative expenses consist primarily of salaries and other related costs for personnel serving the executive, finance, legal, information technology and human resource functions, as well as legal fees, accounting fees, insurance costs, bad debt expenses, shipping, handling and facilities-related costs.

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Results of Operations

This section discusses our consolidated results of operations for the second quarter and the first six months of 2016 compared to the same periods of 2015, and should be read in conjunction with the consolidated financial statements and accompanying condensed notes included in this Form 10-Q.

TABLE 1: RESULTS OF OPERATIONS (Unaudited)
	Three Months Ended June 30,											Six Months Ended June 30,
(In Thousands)	2016			2015			Change $			Change %		2016			2015			Change $			Change %
Revenue:
U.S. Omnipod	$	56,337		$	45,402		$	10,935		24	%	$	107,050		$	85,097		$	21,953		26	%
International Omnipod	16,559			7,640			8,919			117	%	31,939			11,420			$	20,519		180	%
Drug Delivery	14,434			7,509			6,925			92	%	29,554			12,182			$	17,372		143	%
Total revenue	87,330			60,551			26,779			44	%	168,543			108,699			$	59,844		55	%
Cost of revenue	36,873			30,036			6,837			23	%	74,035			48,991			$	25,044		51	%
Gross profit	50,457			30,515			19,942			65	%	94,508			59,708			$	34,800		58	%
Gross margin	57.8		%	50.4		%						56.1		%	54.9		%
Operating expenses:
Research and development	12,953			12,069			884			7	%	25,942			20,276			$	5,666		28	%
Sales and marketing	22,950			19,008			3,942			21	%	46,972			33,718			$	13,254		39	%
General and administrative	15,842			13,497			2,345			17	%	30,581			27,039			$	3,542		13	%
Total operating expenses	51,745			44,574			7,171			16	%	103,495			81,033			$	22,462		28	%
Operating loss	(1,288		)	(14,059		)	(12,771		)	(91	)%	(8,987		)	(21,325		)	$	12,338		(58	)%
Interest expense and other income, net	(2,998		)	(3,193		)	(195		)	(6	)%	(5,924		)	(6,345		)	$	421		(7	)%
Income tax expense	65			15			(50		)	333	%	129			39			$	90		231	%
Income (loss) on discontinued operations, net of tax	153			1,835			1,682			(92	)%	(1,639		)	443			$	(2,082	)	(470	)%
Net loss	$	(4,198	)	$	(15,432	)	$	(11,234	)	(73	)%	$	(16,679	)	$	(27,266	)	$	10,587		(39	)%

Revenue

Our total revenue increased to $87.3 million, up $26.8 million, or 44%, in the second quarter of 2016 compared to the second quarter of 2015, primarily due to strong growth in our U.S. Omnipod revenue, International Omnipod revenue and our on-body injection device for drug delivery. Our U.S. Omnipod revenue increased primarily due to growth in our installed base of Omnipod users which was greatly driven by the expansion in 2015 of our sales force and customer support personnel and strategic initiatives introduced in mid-2015 to expand awareness of the Omnipod System. Our International Omnipod revenue increased primarily due to higher distributor sales on entry into new markets and continued adoption in existing markets. The results for the second quarter of 2015 included lower International Omnipod sales which partially resulted from unfavorable distributor ordering patterns in that quarter when improved production capacity enabled our primary international distributor to reduce on hand inventory levels to better manage their working capital and offset the financial impact of the strength of the U.S. dollar on their business. Our drug delivery revenue increased due to strong growth in demand for our drug delivery device following regulatory approval in December 2014.

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Total revenue increased to $168.5 million, up $59.8 million, or 55% for the six months ended June 30, 2016, compared with the same period in 2015, primarily due to the result of strong growth in our U.S. Omnipod revenue, International Omnipod revenue and our on-body injection device for drug delivery. Our U.S. Omnipod revenue increased primarily due to growth in our installed base of Omnipod users which was greatly driven by the expansion in 2015 of our sales force and customer support personnel and strategic initiatives introduced in mid-2015 to expand awareness of the Omnipod System. The results for the first six months of 2015 included lower U.S. Omnipod sales which partially resulted from unfavorable distributor ordering patterns in the first quarter of 2015 when our U.S. distributors reduced days-on-hand inventory as we increased our production capacity and demonstrated the ability to supply high-quality product to meet customer demand. U.S. distributor ordering patterns stabilized accordingly following the first quarter of 2015. Our International Omnipod revenue increased due to higher distributor sales on entry into new markets and continued adoption in existing markets. The results for the first six months of 2015 included lower International Omnipod sales which partially resulted from unfavorable distributor ordering patterns in the first and second quarters of 2015 when improved production capacity enabled our primary international distributor to reduce on hand inventory levels to better manage their working capital and offset the financial impact of the strength of the U.S. dollar on their business. International distributor ordering patterns stabilized accordingly following the second quarter of 2015. Our drug delivery revenue increased due to strong growth in demand for our drug delivery device following regulatory approval in December 2014.

For the year ending December 31, 2016, we expect strong revenue growth in our continuing operations from all of our product lines as we continue our expansion in the U.S. and internationally. We continue to expect strong growth of approximately 20% in our worldwide Omnipod installed base. We also expect that the revenue from our drug delivery devices will be a higher relative percentage of our overall growth as we increase commercial sales.

Cost of Revenue

Cost of revenue increased to $36.9 million, up $6.8 million in the second quarter of 2016 compared to the same period in 2015, primarily due to an increase in sales volumes. There were approximately $2.5 million of scrap and warranty charges in the second quarter of 2015 that were considered non-recurring in nature.

Total cost of revenue increased to $74.0 million, up $25.0 million for the six months ended June 30, 2016, compared to the same period in 2015, primarily due to an increase in sales volumes and $1.9 million of costs incurred in the first quarter of 2016 indirectly attributable to a voluntary Field Safety Notification we initiated in November 2015. There were approximately $2.5 million of scrap and warranty charges in the second quarter and the first six months of 2015 that were considered non-recurring in nature.

Gross Margin

Gross margin was 58% in the second quarter of 2016, compared with 50% in the second quarter of 2015. This improvement is mainly due to manufacturing efficiency and effectiveness improvements on higher sales and production volumes. There were approximately $2.5 million of scrap and warranty charges in the second quarter of 2015 that were considered non-recurring in nature.

Gross margin for the six months ended June 30, 2016 was 56% compared with 55% for the six months ended June 30, 2015. The margin improvement was mainly due to manufacturing efficiency and effectiveness improvements on higher sales and production volumes, partially offset by costs incurred in the first quarter of 2016 indirectly attributable to a voluntary Field Safety Notification we initiated in November 2015. There were approximately $2.5 million of scrap and warranty charges in the second quarter and the first six months of 2015 that were considered non-recurring in nature.

For the year ending December 31, 2016, we expect gross margin to increase primarily from improvements to our manufacturing efficiency and effectiveness as demonstrated in the second quarter of 2016.

Research and Development

Research and development expenses for the three month period ended June 30, 2016 were $13.0 million compared with $12.1 million for the same period in 2015. The approximate $0.9 million increase was the result of expenses related to our development projects, including our artificial pancreas program, mobile application development including integration with continuous glucose monitoring technology, development efforts with Eli Lilly and Company for the use of concentrated insulin for patients with higher insulin-resistance and other Omnipod product improvement initiatives.

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Research and development expenses for the six months ended June 30, 2016, were $25.9 million compared with $20.3 million for the same period in 2015. The approximate $5.7 million increase was the result of expenses related to our development projects, including our artificial pancreas program, mobile application development including integration with continuous glucose monitoring technology, development efforts with Eli Lilly and Company for the use of concentrated insulin for patients with higher insulin-resistance and other Omnipod product improvement initiatives.

For the year ending December 31, 2016, we expect overall research and development spending to increase due to the development efforts on our on-going projects including our artificial pancreas program, mobile application development including integration with continuous glucose monitoring technology, development efforts with Eli Lilly for the use of concentrated insulin, and the continued investment to support the use our technology as a delivery platform for other pharmaceuticals.

Sales and Marketing

Sales and marketing expenses for the three month period ended June 30, 2016 were $23.0 million compared with $19.0 million for the same period in 2015. The approximate $3.9 million increase was mainly the result of a $5.5 million increase in personnel-related expenses, including increased incentive compensation costs on growth in the business, as well as costs associated with the expansion in 2015 of our sales force and customer support personnel, partially offset by a reduction in expenses associated with outside service providers.

Sales and marketing expenses for the six months ended June 30, 2016 were $47.0 million compared to $33.7 million for the same period in 2015. The approximate $13.3 million increase was mainly the result of a $12.6 million increase in personnel-related expenses, including increased incentive compensation costs resulting from growth in the business, as well as costs associated with the expansion in 2015 of our sales force and customer support personnel, partially offset by a reduction in expenses associated with outside service providers. Additionally, there was an increase in costs associated with marketing efforts, new market opportunities and other strategic initiatives introduced in mid-2015 as we continue to expand awareness of the Omnipod System and our on-body injection devices for delivery of other pharmaceuticals.

We expect sales and marketing expenses in the year ending December 31, 2016 to increase as we see the full-year impact of the 2015 commercial team expansion and invest in initiatives that will enhance awareness, customer satisfaction and drive increased adoption of the Omnipod System, as well as increased adoption of our technology as a delivery platform for other pharmaceuticals.

General and Administrative

General and administrative expenses for the three month period ended June 30, 2016 were $15.8 million compared with $13.5 million for the same period in 2015. The approximate $2.3 million increase is primarily attributable to personnel-related costs on higher incentive compensation associated with growth in our business, as well as additional staff to support our growth expectations and fees paid for external consultants.

General and administrative expenses for the six months ended June 30, 2016 were $30.6 million compared to $27.0 million for the same period in 2015. The approximate $3.5 million increase is mainly due to employee compensation costs and fees paid for external consultants.

For the year ending December 31, 2016, we expect overall general and administrative expenses to increase as compared to 2015 as we continue to grow the business and make investments in our operating structure to support this continued growth.

Interest Expense and Other Income, Net

Interest expense and other income, net for the three month period ended June 30, 2016, were $3.0 million compared with $3.2 million for the same period in 2015. This $0.2 million decrease is mainly due to a slight decrease in capital lease interest expense.

Interest and other expense for the six months ended June 30, 2016, were $5.9 million compared to $6.3 million in 2015. This $0.4 million decrease is mainly due to a slight decrease in capital lease interest expense.

Liquidity and Capital Resources

32

As of June 30, 2016, we had $75.7 million in cash and cash equivalents and $35.6 million in short-term investments. We believe that our current liquidity, together with the cash expected to be generated from sales, will be sufficient to meet our projected operating and debt service requirements for at least the next twelve months.

Debt

In June 2014 we sold $201.3 million in principal amount of 2% Convertible Senior Notes due June 15, 2019 (the "2% Notes"). The interest rate on the notes is 2% per annum, payable semi-annually in arrears in cash on June 15 and December 15 of each year. The 2% Notes are convertible into our common stock at an initial conversion rate of 21.5019 shares of common stock per $1,000 principal amount of the 2% Notes, which is equivalent to a conversion price of approximately $46.51 per share, subject to adjustment under certain circumstances.

Cash interest expense related to the 2% Notes was $1.0 million in both the three months ended June 30, 2016 and 2015, respectively. Cash interest expense related to the 2% Notes was $2.0 million in both the six months ended June 30, 2016 and 2015, respectively.

Non-cash interest expense related to the 2% Notes was $2.0 million and $1.9 million in the three months ended June 30, 2016 and 2015, respectively. Non-cash interest expense related to the 2% Notes was $4.0 million and $3.8 million in the six months ended June 30, 2016 and 2015, respectively.

As of June 30, 2016, we included $175.7 million on the balance sheet in long-term debt related to the 2% Notes, which represents the principal amount of the notes, less unamortized debt discount and deferred financing costs.

Additional information regarding our debt issuances is provided in note 6 to the consolidated financial statements included in this Form 10-Q.

Capital Leases

As of June 30, 2016 and December 31, 2015, we have approximately $13.7 million of manufacturing equipment acquired under capital leases. The obligations under the capital leases are being repaid in equal monthly installments over 24 to 36 month terms and include principal and interest payments with an effective interest rate of 13% to 17%. At June 30, 2016, $2.3 million was included in current liabilities on our balance sheet related to these capital leases.

Additional information regarding our capital leases is provided in note 7 to the consolidated financial statements included in this Form 10-Q.

Summary of Cash Flows

	Three Months Ended June 30,
(In thousands)	2016			2015
Cash (used in) provided by:
Operating activities	$	(6,836	)	$	(2,703	)
Investing activities	(35,788		)	(4,601		)
Financing activities	(4,592		)	1,248
Effect of exchange rate changes on cash	205			—
Net decrease in cash and cash equivalents	$	(47,011	)	$	(6,056	)

Operating Activities

Our net cash used in operating activities for the six months ended June 30, 2016 was $6.8 million compared to $2.7 million in the same period of 2015. The increase was primarily due to timing of disbursements and receipts along with an increased investment in inventories in 2016 to support the growth of the business, partially offset by a lower net loss recorded for the period.

Investing Activities

Our net cash used in investing activities for the six months ended June 30, 2016 was $35.8 million compared to $4.6 million in 2015. In the second quarter of 2016, the Company invested $35.6 million into short-term investments; there were no such investments in 2015. In addition, the increase in investing activities relates to

33

higher capital purchases for the six months ended 2016 compared to 2015, partially offset by proceeds from the divestiture of our Neighborhood Diabetes business in February 2016.

Financing Activities

We had net cash used in financing activities for the six months ended June 30, 2016 of $4.6 million compared to $1.2 million in net cash provided by financing activities in 2015. The decrease was primarily attributable to a decrease in proceeds from the exercise of employee stock options.

Commitments and Contingencies

We lease our facilities in Massachusetts, Canada and Singapore. Our leases are accounted for as operating leases. The leases generally provide for a base rent plus real estate taxes and certain operating expenses related to the leases.

Certain of our operating lease agreements contain scheduled rent increases. Rent expense is recorded using the straight-line method and deferred rent is included in other liabilities in the accompanying balance sheets.

Legal Proceedings

The significant estimates and judgments related with establishing litigation reserves are discussed under "Legal Proceedings" in note 13 of the consolidated financial statements included under Item 8 of this Form 10-K.

Off-Balance Sheet Arrangements

As of June 30, 2016, we did not have any off-balance sheet financing arrangements.

Critical Accounting Policies and Estimates

Our financial statements are based on the selection and application of generally accepted accounting principles, which require us to make estimates and assumptions about future events that affect the amounts reported in our financial statements and the accompanying condensed notes. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to our financial statements. We have reviewed our policies and estimates to determine our critical accounting policies for the six months ended June 30, 2016. We have made no material changes to the critical accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2015.

Recent Accounting Pronouncements

Information with respect to recent accounting developments is provided in note 2 to the consolidated financial statements included in this Form 10-Q.

34

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instruments consist of cash, cash equivalents, short-term investments, accounts receivable, accounts payable, accrued expenses and long-term obligations. We consider investments that, when purchased, have a remaining maturity of 90 days or less to be cash equivalents. The primary objectives of our investment strategy are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields. To minimize our exposure to an adverse shift in interest rates, we invest mainly in cash equivalents. We do not believe that a 10% change in interest rates would have a material impact on the fair value of our investment portfolio or our interest income.

As of June 30, 2016, we had outstanding debt recorded on our consolidated balance sheet of $201.3 million, gross of deferred financing costs and unamortized debt discount, related to our 2% Notes; and $2.3 million related to capital lease obligations. As the interest rates are fixed, changes in interest rates do not affect the value of our debt or capital lease obligations.

Foreign Currency Exchange Risk. Our business is subject to risks, including, but not limited to: unique economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility. We are primarily exposed to currency exchange rate fluctuations related to our subsidiary operation in Canada. The majority of our sales outside of the U.S. are transacted in U.S. dollars and are not subject to material foreign currency fluctuations.

Fluctuations in foreign currency rates could affect our sales, cost of goods and operating margins and could result in exchange losses. In addition, currency devaluations can result in a loss if we hold deposits of that currency. A hypothetical 10% increase or decrease in foreign currencies that we transact in would not have a material adverse impact on our business, financial condition or results of operations.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of June 30, 2016, our management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) under the supervision and with the participation of our chief executive officer and chief financial officer. In designing and evaluating our disclosure controls and procedures, we and our management recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures. Based upon that evaluation of our disclosure controls and procedures as of June 30, 2016, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the six months ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

35

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding our legal proceedings is provided in Note 13 to the consolidated financial statements in this Form 10-Q.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, which could materially affect our business, financial condition or future results. These risks are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

36

Item 6. Exhibits

Number	Description
10.1	Form of International Non-Qualified Stock Option Agreement under the Third Amended and Restated 2007 Stock Option and Incentive Plan
10.2	Form of Time Vesting Restricted Stock Unit Agreement for Non-Employee Directors under the Third Amended and Restated 2007 Stock Option and Incentive Plan
10.3	Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the Third Amended and Restated 2007 Stock Option and Incentive Plan
10.4	Form of Vice President Incentive Stock Option Agreement (Three Year Vest) under the Third Amended and Restated 2007 Stock Option and Incentive Plan
10.5	Insulet Corporation Fourth Amended and Restated 2007 Employee Stock Purchase Plan
31.1	Certification of Patrick J. Sullivan, President and Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Michael L. Levitz, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Patrick J. Sullivan, President and Chief Executive Officer, and Michael L. Levitz, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from Insulet Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in XBRL (eXtensible Business Reporting Language), as follows:
	(i) Consolidated Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015 (Unaudited)
	(ii) Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2016 and June 30, 2015 (Unaudited)
	(iii) Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2016 and June 30, 2015 (Unaudited)
	(iv) Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and June 30, 2015 (Unaudited)
	(iv) Condensed Notes to Consolidated Financial Statements (Unaudited)

37

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	INSULET CORPORATION (Registrant)
Date: August 4, 2016	/s/ Patrick J. Sullivan
	Patrick J. Sullivan
	President and Chief Executive Officer (Principal Executive Officer)

Date: August 4, 2016	/s/ Michael L. Levitz
	Michael L. Levitz
	Chief Financial Officer (Principal Financial and Accounting Officer)

38

EX-10.1

EXHIBIT 10.1

NON-QUALIFIED STOCK OPTION AGREEMENT

UNDER THE INSULET CORPORATION THIRD AMENDED AND RESTATED
2007 STOCK OPTION AND INCENTIVE PLAN

Name of Optionee:    

No. of Option Shares:    

Option Exercise Price per Share:    

Grant Date:    

Expiration Date:    

Pursuant to the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan as amended through the date hereof (the “Plan”), Insulet Corporation (the “Company”) hereby grants to the Optionee named above an option (the “Stock Option”) to purchase on or prior to the Expiration Date specified above all or part of the number of shares of Common Stock, par value $0.001 per share (the “Stock”), of the Company specified above at the Option Exercise Price per Share specified above subject to the terms and conditions set forth herein and in the Plan.

1.Exercisability Schedule. No portion of this Stock Option may be exercised until such portion shall have become exercisable. Except as set forth below, and subject to the discretion of the Administrator (as defined in Section 2 of the Plan) to accelerate the exercisability schedule hereunder, this Stock Option shall be vested and exercisable as follows: 25% of the number of Option Shares as set forth above shall become vested and exercisable on the first anniversary of the Grant Date and the remaining number of Option Shares set forth above shall become vested and exercisable in 12 equal quarterly installments thereafter so long as the Optionee remains an employee of the Company or a Subsidiary on such vesting dates. Once exercisable, this Stock Option shall continue to be exercisable at any time or times prior to the close of business on the Expiration Date, subject to the provisions hereof and of the Plan.

2.Manner of Exercise.

(a)The Optionee may exercise this Stock Option only in the following manner: from time to time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice to the Administrator of his or her election to purchase some or all of the Option Shares purchasable at the time of such notice. This notice shall specify the number of Option Shares to be purchased.

Payment of the purchase price for the Option Shares may be made by one or more of the following methods: (i) in cash, by certified or bank check or other instrument acceptable to the Administrator; (ii) through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the Optionee on the open market or that are beneficially owned by the Optionee and are not then subject to any restrictions under any Company plan and that otherwise satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee delivering to the Company a properly executed exercise notice together with irrevocable

1

EXHIBIT 10.1

instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the option purchase price, provided that in the event the Optionee chooses to pay the option purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure; or (iv) a combination of (i), (ii) and (iii) above. Payment instruments will be received subject to collection.

The transfer to the Optionee on the records of the Company or of the transfer agent of the Option Shares will be contingent upon (i) the Company’s receipt from the Optionee of the full purchase price for the Option Shares, as set forth above, (ii) the fulfillment of any other requirements contained herein or in the Plan or in any other agreement or provision of laws, and (iii) the receipt by the Company of any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be in compliance with applicable laws and regulations. In the event the Optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of the Shares attested to.

(b)The shares of Stock purchased upon exercise of this Stock Option shall be transferred to the Optionee on the records of the Company or of the transfer agent upon compliance to the satisfaction of the Administrator with all requirements under applicable laws or regulations in connection with such transfer and with the requirements hereof and of the Plan. The determination of the Administrator as to such compliance shall be final and binding on the Optionee. The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Stock subject to this Stock Option unless and until this Stock Option shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall have transferred the shares to the Optionee, and the Optionee’s name shall have been entered as the stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Stock.

(c)The minimum number of shares with respect to which this Stock Option may be exercised at any one time shall be 100 shares, unless the number of shares with respect to which this Stock Option is being exercised is the total number of shares subject to exercise under this Stock Option at the time.

(d)Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the Expiration Date hereof.

3.Termination of Employment. If the Optionee’s employment by the Company or a Subsidiary (as defined in the Plan) is terminated, the period within which to exercise the Stock Option may be subject to earlier termination as set forth below.

(a)Termination Due to Death. If the Optionee’s employment terminates by reason of the Optionee’s death, any portion of this Stock Option outstanding on such date shall become fully exercisable and may thereafter be exercised by the Optionee’s legal representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier.

2

EXHIBIT 10.1

(b)Termination Due to Disability. If the Optionee’s employment terminates by reason of the Optionee’s disability (as determined by the Administrator), any portion of this Stock Option outstanding on such date shall become fully exercisable and may thereafter be exercised by the Optionee for a period of 12 months from the date of termination or until the Expiration Date, if earlier.

(c)Termination for Cause. If the Optionee’s employment terminates for Cause (as defined below), any portion of this Stock Option outstanding on such date shall terminate immediately and be of no further force and effect.

(d)Other Termination. If the Optionee’s employment terminates for any reason other than the Optionee’s death, the Optionee’s disability, or Cause, and unless otherwise determined by the Administrator, any portion of this Stock Option outstanding on such date may be exercised, to the extent exercisable on the date of termination, for a period of three months from the date of termination or until the Expiration Date, if earlier. Any portion of this Stock Option that is not exercisable on the date of termination shall terminate immediately and be of no further force or effect.

(e)Termination in Connection with a Sale Event. If the Optionee’s employment is terminated by the Company without Cause or by the Optionee for Good Reason in either case within 24 months after a Sale Event, this Stock Option shall immediately become 100% vested and exercisable as of the date of such termination.

For purposes of this Agreement, “Cause” shall mean the occurrence of any one or more of the following events: (i) conduct by the Optionee constituting a material act of willful misconduct in connection with the performance of Optionee’s duties to the Company, including, without limitation, misappropriation of funds or property of the Company or any of its subsidiaries or affiliates other than the occasional, customary and de minimis use of Company property for personal purposes; or (ii) the commission by the Optionee of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty or fraud, or any conduct by the Optionee that would reasonably be expected to result in material injury to the Company or any of its subsidiaries and affiliates if he were retained in his position; or (iii) willful and deliberate material non-performance by the Optionee of his duties to the Company (other than by reason of the Optionee’s physical or mental illness, incapacity or disability) which has continued for more than 30 days following written notice of such non-performance from the Company; or  (iv) a breach by the Optionee of any of the provisions contained any agreements between Optionee and the Company relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions; or (v) a material violation by the Optionee of the Company’s employment policies which has continued following written notice of such violation from the Company; or (vi) willful failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the willful inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation.  For purposes of clauses (i), (iii) or (vi) hereof, no act, or failure to act, on Optionee’s part shall be deemed “willful” unless done, or

3

EXHIBIT 10.1

omitted to be done, by the Optionee without reasonable belief that the Optionee’s act or failure to act, was in the best interest of the Company and its subsidiaries and affiliates.

4.Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

5.Transferability. This Agreement is personal to the Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution. This Stock Option is exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or legatee.

6.Tax Withholding. The Optionee shall, not later than the date as of which the exercise of this Stock Option becomes a taxable event for Federal income tax purposes, pay to the Company or make arrangements satisfactory to the Administrator for payment of any Federal, state, and local taxes required by law to be withheld on account of such taxable event. The Company shall have the authority to cause the minimum required tax withholding obligation to be satisfied, in whole or in part, by withholding from shares of Stock to be issued to the Optionee a number of shares of Stock with an aggregate Fair Market Value that would satisfy the withholding amount due.

7.No Obligation to Continue Employment. Neither the Company nor any Subsidiary is obligated by or as a result of the Plan or this Agreement to continue the Optionee in employment and neither the Plan nor this Agreement shall interfere in any way with the right of the Company or any Subsidiary to terminate the employment of the Optionee at any time.

8.Integration. This Agreement constitutes the entire agreement between the parties with respect to this Stock Option and supersedes all prior agreements and discussions between the parties concerning such subject matter.

9.Data Privacy Consent. In order to administer the Plan and this Agreement and to implement or structure future equity grants, the Company, its subsidiaries and affiliates and certain agents thereof (together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification number, home address and telephone number, date of birth and other information that is necessary or desirable for the administration of the Plan and/or this Agreement (the “Relevant Information”). By entering into this Agreement, the Optionee (i) authorizes the Company to collect, process, register and transfer to the Relevant Companies all Relevant Information; (ii) waives any privacy rights the Optionee may have with respect to the Relevant Information; (iii) authorizes the Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in which the Relevant Companies consider appropriate. The Optionee shall have access to, and the right to change, the Relevant Information. Relevant Information will only be used in accordance with applicable law.

4

EXHIBIT 10.1

10.Notices. Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Optionee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

11.Clawback. The Optionee agrees and acknowledges that the entire Stock Option, whether or not vested or exercised, is subject to the terms and provisions of the Company’s Policy for Recoupment of Incentive Compensation, to the extent applicable.

INSULET CORPORATION

______________________________

By:    Patrick J. Sullivan
Title: Chief Executive Officer

______________________________Optionee NameOptionee Acceptance Date

5

EXHIBIT 10.1

Appendix

Country specific terms and conditions for non-US Participants

This Appendix includes additional terms and conditions that govern the Option granted to the Optionee under the Plan if the Optionee resides in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and this Agreement.

GERMANY

No public offering in Germany: Award Recipients may not offer the shares of common stock acquired pursuant to an award under the Plan publicly in Germany. Shares may only be sold in Germany in accordance with the restrictions of the German Securities Prospectus Act (Wertpapierprospektgesetz).

No investment advice: The Company does not offer investment advice in respect of the exercising of Awards. Please consult your personal investment and tax advisor if you are unsure whether to exercise your awards.

Tax Obligations:  The following provisions supplement Section 6 of the Agreement:

Any reference to "Federal income tax(es)" or "Federal tax(es)" shall comprehend German individual income and ancillary taxes (Einkommensteuer, Solidaritätszuschlag, Kirchensteuer) to be withheld by the Company or, if different, the legal entity that qualifies as the employer (Arbeitgeber) for German wage tax (Lohnsteuer). The provisions in Section 6 (as amended by the foregoing sentence) shall apply mutatis mutandis to the employee's share of contributions to the social security system (Sozialversicherungsbeiträge, encompassing esp. contributions to the Krankenversicherung, Pflegeversicherung, Rentenversicherung and Arbeitslosenversicherung).

The Optionee irrevocably agrees to indemnify and keep indemnified the Company and/or the employer (Arbeitgeber) for German wage tax purposes for any secondary liability in relation to tax or social security contributions under the German wage tax / withholding at source system in respect of the exercise of the Option and the acquisition of any Shares.

If the employer for German wage tax purposes is a legal entity different from the Company the Optionee shall notify the employer of the purchase / transfer to the Optionee of any shares of Stock upon exercise of the Stock Option.

UNITED KINGDOM

Termination of employment: The following provisions supplement Section 3 of the Agreement:

6

EXHIBIT 10.1

For the purposes of this Agreement, the date of termination of the Optionee's employment shall be the date the Optionee is no longer actively providing services to the Company or one of its Subsidiaries (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), and unless otherwise determined by the Administrator, (i) the exercisability and/or vesting schedule of this Stock Option will not continue during or be extended by any notice period (e.g., the Optionee's period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any); and (ii) the period (if any) during which the Optionee may exercise this Stock Option after the termination of the Optionee’s employment will commence on the date the Optionee ceases to actively provide services and will not be extended by any notice period mandated under employment laws in the jurisdiction where the Optionee is employed or terms of the Optionee’s employment agreement, if any; the Administrator shall have the exclusive discretion to determine when the Optionee is no longer actively providing services for the purposes hereof (including whether the Optionee may still be considered providing service while on a leave of absence).

Tax Obligations.  The following provisions supplement Section 6 of the Agreement:

If payment or withholding of the applicable income tax (including the Employer’s NIC Liability, as defined below) is not made within ninety (90) days of the event giving rise to such liability to tax (the “Due Date”) or such other period specified in section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 ("ITEPA"), the amount of any uncollected income tax will constitute a loan owed by Optionee to the relevant employer entity ("Employer"), effective on the Due Date. Optionee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue and Customs (“HMRC”), it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 6 of the Agreement and Section 15 of the Plan.

Notwithstanding the foregoing, if Optionee is a director or executive officer of the Company (within the meaning of Paragraph 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), Optionee will not be eligible for such a loan to cover the income taxes. In the event that Optionee is such a director or executive officer and the income taxes are not collected from or paid by Optionee by the Due Date, the amount of any uncollected income taxes will constitute a benefit to Optionee on which additional income tax and national insurance contributions (including the Employer’s NIC Liability, as defined below) will be payable. Optionee will be responsible for reporting and paying any income tax and national insurance contributions (including the Employer’s Liability, as defined below) due on this additional benefit directly to HMRC under the self-assessment regime.

The Optionee irrevocably agrees to indemnify and keep indemnified the Company and/or the Employer for any liability in relation to income tax under the U.K. Pay As You Earn system, including Employer's NIC Liability in respect of the exercise of the Option, the acquisition and disposal of any Shares.

7

EXHIBIT 10.1

Joint Election.  As a condition of Optionee’s participation in the Plan and the exercise of the Option, Optionee agrees to accept any liability for secondary Class 1 national insurance contributions which may be payable by the Company and/or the Employer in connection with the exercise of the Option (the “Employer’s NIC Liability”). Without prejudice to the foregoing, Optionee agrees to enter into a joint election with the Company and the Employer, the form of such joint election being formally approved by HMRC (the “Joint Election”), and any other required consent or elections. Optionee further agrees to enter into such other Joint Elections as may be required between Optionee and any successor to the Company and/or the Employer. Optionee further agrees that the Company and/or the Employer may collect the Employer’s NIC Liability from Optionee by any of the means set forth in Section 6 of the Agreement and Section 15 of the Plan.

If Optionee does not enter into the Joint Election prior to the exercise of the Option, Optionee will forfeit the Option and any Stock will be returned to the Company at no cost to the Company, without any liability to the Company and/or the Employer.

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EX-10.2

EXHIBIT 10.2

TIME VESTING RESTRICTED STOCK UNIT AGREEMENT

FOR NON-EMPLOYEE DIRECTORS

UNDER THE INSULET CORPORATION THIRD
AMENDED AND RESTATED 2007 STOCK OPTION AND INCENTIVE PLAN

Name of Grantee:            

No. of Restricted Stock Units Granted:

Grant Date:                

Pursuant to the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan as amended through the date hereof (the “Plan”), Insulet Corporation (the “Company”) hereby grants a deferred stock award consisting of the number of Restricted Stock Units listed above (an “Award”) to the Grantee named above, who is a Non-Employee Director of the Company. Each Restricted Stock Unit shall relate to one share of Common Stock, par value $0.001 per share (the “Stock”) of the Company, subject to the restrictions and conditions set forth herein and in the Plan.

1.Acceptance of Award. The Grantee shall have no rights with respect to this Award unless he or she shall have accepted this Award. Any consideration due to the Company on the issuance of the Award has been deemed to be satisfied by past services rendered by the Grantee to the Company.

2.Restrictions on Transfer of Award. The Award may not be sold, transferred, pledged, assigned or otherwise encumbered or disposed of by the Grantee, and any shares of Stock issuable with respect to the Award may not be sold, transferred, pledged, assigned or otherwise encumbered or disposed of until (i) the Restricted Stock Units have vested as provided in Section 3 of this Agreement and (ii) shares of Stock have been issued to the Grantee in accordance with the terms of the Plan and this Agreement.

3.Vesting of Restricted Stock Units. The Restricted Stock Units shall vest 100% on April 30^, 2017, provided that the Grantee is then, and since the Effective Date has continuously been, serving as a Director of the Company. The Administrator may at any time accelerate the vesting schedule specified in this Paragraph 3.

4.Termination as Director. If the Grantee ceases to be a Director of the Company prior to the vesting or termination of this Award, the following shall occur:

(a)Termination Due to Death or Disability. If the Grantee ceases to be a Director of the Company by reason of the Grantee’s death or disability (as determined by the Administrator), this Award shall become fully vested on the date the Grantee ceases to be a Director of the Company for such reason.

(b)Termination for any reason other than Death or Disability. If the Grantee ceases to be a Director of the Company for any reason other than the Grantee’s death or

disability prior to the satisfaction of the vesting conditions set forth in Section 3 above, any Restricted Stock Units that have not vested as of such date shall automatically and without notice terminate, be forfeited and be and become null and void, and neither the Grantee nor any of his or her successors, heirs, assigns, or personal representatives will thereafter have any further rights or interests in such unvested Restricted Stock Units.

5.Issuance of Shares of Stock. As soon as practicable following each Vesting Date (but in no event later than two and one-half months after the end of the year in which the Vesting Date occurs), the Company shall issue to the Grantee the number of shares of Stock equal to the aggregate number of Restricted Stock Units credited to the Grantee that have vested pursuant to Section 3 of this Agreement on such date and the Grantee shall thereafter have all the rights of a stockholder of the Company with respect to such shares, including voting and dividend rights, and such shares of Stock shall not be restricted by the provisions hereof.

6.Incorporation of Plan. Notwithstanding anything herein to the contrary, this Agreement shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

7.Section 409A of the Code. This Agreement shall be interpreted in such a manner that all provisions relating to the settlement of the Award are exempt from the requirements of Section 409A of the Code as “short-term deferrals” as described in Section 409A of the Code.

8.No Obligation to Continue as a Director. Neither the Plan nor this Award confers upon the Grantee any rights with respect to continuance as a Director.

9.Integration. This Agreement constitutes the entire agreement between the parties with respect to this Award and supersedes all prior agreements and discussions between the parties concerning such subject matter.

10.Data Privacy Consent. In order to administer the Plan and this Agreement and to implement or structure future equity grants, the Company, its subsidiaries and affiliates and certain agents thereof (together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification number, home address and telephone number, date of birth and other information that is necessary or desirable for the administration of the Plan and/or this Agreement (the “Relevant Information”). By entering into this Agreement, the Grantee (i) authorizes the Company to collect, process, register and transfer to the Relevant Companies all Relevant Information; (ii) waives any privacy rights the Grantee may have with respect to the Relevant Information; (iii) authorizes the Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in which the Relevant Companies consider appropriate. The Grantee shall have access to, and the right to change, the Relevant Information. Relevant Information will only be used in accordance with applicable law.

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11.Notices. Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Grantee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

12.Clawback. The Grantee agrees and acknowledges that the entire Award, whether or not vested or exercised, is subject to the terms and provisions of the Company’s Policy for Recoupment of Incentive Compensation, to the extent applicable.

INSULET CORPORATION

______________________________

By:    Patrick J. Sullivan

Title: Chief Executive Officer

______________________________Grantee NameGrantee Acceptance Date

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EX-10.3

EXHIBIT 10.3

NON-QUALIFIED STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS

UNDER THE INSULET CORPORATION THIRD AMENDED AND RESTATED
2007 STOCK OPTION AND INCENTIVE PLAN

Name of Optionee:     

No. of Option Shares:     

Option Exercise Price per Share:         

Grant Date:    

Expiration Date:     

Pursuant to the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan as amended through the date hereof (the “Plan”), Insulet Corporation (the “Company”) hereby grants to the Optionee named above, who is a Director of the Company but is not an employee of the Company, an option (the “Stock Option”) to purchase on or prior to the Expiration Date specified above all or part of the number of shares of Common Stock, par value $.001 per share (the “Stock”), of the Company specified above at the Option Exercise Price per Share specified above subject to the terms and conditions set forth herein and in the Plan. This Stock Option is not intended to be an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended.

1.Exercisability Schedule. No portion of this Stock Option may be exercised until such portion shall have become exercisable. Except as set forth below, and subject to the discretion of the Administrator (as defined in Section 2 of the Plan) to accelerate the exercisability schedule hereunder, this Stock Option shall be vested and exercisable as follows: 100% of the number of Option Shares as set forth above shall become vested and exercisable on April 30, 2017, so long as the Optionee remains in service as a member of the Board on such vesting date. In the event of the termination of the Optionee’s service as a director of the Company because of death, this Stock Option shall become immediately exercisable in full, whether or not exercisable at such time. Once exercisable, this Stock Option shall continue to be exercisable at any time or times prior to the close of business on the Expiration Date, subject to the provisions hereof and of the Plan.

2.Manner of Exercise.

(a)The Optionee may exercise this Stock Option only in the following manner: from time to time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice to the Administrator of his or her election to purchase some or all of the Option Shares purchasable at the time of such notice. This notice shall specify the number of Option Shares to be purchased.

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EXHIBIT 10.3

Payment of the purchase price for the Option Shares may be made by one or more of the following methods: (i) in cash, by certified or bank check or other instrument acceptable to the Administrator; (ii) through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the Optionee on the open market or that are beneficially owned by the Optionee and are not then subject to any restrictions under any Company plan and that otherwise satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the option purchase price, provided that in the event the Optionee chooses to pay the option purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure; (iv) by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; or (v) a combination of (i), (ii), (iii) and (iv) above. Payment instruments will be received subject to collection.

The transfer to the Optionee on the records of the Company or of the transfer agent of the Option Shares will be contingent upon (i) the Company’s receipt from the Optionee of the full purchase price for the Option Shares, as set forth above, (ii) the fulfillment of any other requirements contained herein or in the Plan or in any other agreement or provision of laws, and (iii) the receipt by the Company of any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be in compliance with applicable laws and regulations. In the event the Optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of the Shares attested to.

(b)The shares of Stock purchased upon exercise of this Stock Option shall be transferred to the Optionee on the records of the Company or of the transfer agent upon compliance to the satisfaction of the Administrator with all requirements under applicable laws or regulations in connection with such transfer and with the requirements hereof and of the Plan. The determination of the Administrator as to such compliance shall be final and binding on the Optionee. The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Stock subject to this Stock Option unless and until this Stock Option shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall have transferred the shares to the Optionee, and the Optionee’s name shall have been entered as the stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Stock.

(c)The minimum number of shares with respect to which this Stock Option may be exercised at any one time shall be 100 shares, unless the number of shares with respect to which this Stock Option is being exercised is the total number of shares subject to exercise under this Stock Option at the time.

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EXHIBIT 10.3

(d)Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the Expiration Date hereof.

3.Termination as Director. If the Optionee ceases to be a Director of the Company, the period within which to exercise the Stock Option may be subject to earlier termination as set forth below.

(a)Termination by Reason of Death. If the Optionee ceases to be a Director by reason of the Optionee’s death, any portion of this Stock Option outstanding on such date may be exercised by his or her legal representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier.

(b)Termination for Cause. If the Optionee ceases to be a Director for Cause, any portion of this Stock Option outstanding on such date shall terminate immediately and have no further force and effect. “Cause” shall mean conduct involving one or more of the following: (i) the substantial and continuing failure of the Optionee, after notice thereof, to render services to the Company in accordance with the terms or requirements of his or her agreement or arrangement; (ii) disloyalty, gross negligence, willful misconduct, dishonesty or fraud upon the Company; (iii) breach of his or her agreement with the Company, which results in direct or indirect loss, damage or injury to the Company; (iv) the unauthorized disclosure of any trade secret or confidential information of the Company; or (v) the commission of an act which induces any customer or supplier to breach a contract with the Company.

(c)Other Termination. If the Optionee ceases to be a Director for any reason other than for Cause or the Optionee’s death, any portion of this Stock Option outstanding on such date may be exercised for a period of six months from the date of termination or until the Expiration Date, if earlier.

4.Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

5.Transferability. This Agreement is personal to the Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution. This Stock Option is exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or legatee.

6.No Obligation to Continue as a Director. Neither the Plan nor this Stock Option confers upon the Optionee any rights with respect to continuance as a Director.

7.Integration. This Agreement constitutes the entire agreement between the parties with respect to this Stock Option and supersedes all prior agreements and discussions between the parties concerning such subject matter.

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EXHIBIT 10.3

8.Data Privacy Consent. In order to administer the Plan and this Agreement and to implement or structure future equity grants, the Company, its subsidiaries and affiliates and certain agents thereof (together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification number, home address and telephone number, date of birth and other information that is necessary or desirable for the administration of the Plan and/or this Agreement (the “Relevant Information”). By entering into this Agreement, the Optionee (i) authorizes the Company to collect, process, register and transfer to the Relevant Companies all Relevant Information; (ii) waives any privacy rights the Optionee may have with respect to the Relevant Information; (iii) authorizes the Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in which the Relevant Companies consider appropriate. The Optionee shall have access to, and the right to change, the Relevant Information. Relevant Information will only be used in accordance with applicable law.

9.Notices. Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Optionee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

10.Clawback. The Optionee agrees and acknowledges that the entire Stock Option, whether or not vested or exercised, is subject to the terms and provisions of the Company’s Policy for Recoupment of Incentive Compensation, to the extent applicable.

INSULET CORPORATION

______________________________

By:    Patrick J. Sullivan
Title: Chief Executive Officer

______________________________Optionee Name
Optionee Acceptance Date

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EX-10.4

EXHIBIT 10.4

INCENTIVE STOCK OPTION AGREEMENT

UNDER THE INSULET CORPORATION THIRD AMENDED AND RESTATED
2007 STOCK OPTION AND INCENTIVE PLAN

Name of Optionee:    

No. of Option Shares:    

Option Exercise Price per Share:    

Grant Date:    

Expiration Date:    

Pursuant to the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan as amended through the date hereof (the “Plan”), Insulet Corporation (the “Company”) hereby grants to the Optionee named above an option (the “Stock Option”) to purchase on or prior to the Expiration Date specified above all or part of the number of shares of Common Stock, par value $0.001 per share (the “Stock”), of the Company specified above at the Option Exercise Price per Share specified above subject to the terms and conditions set forth herein and in the Plan.

1.Exercisability Schedule. No portion of this Stock Option may be exercised until such portion shall have become exercisable. Except as set forth below, and subject to the discretion of the Administrator (as defined in Section 2 of the Plan) to accelerate the exercisability schedule hereunder, this Stock Option shall be vested and exercisable as follows: 25% of the number of Option Shares as set forth above shall become vested and exercisable on the first anniversary of the Grant Date and the remaining number of Option Shares set forth above shall become vested and exercisable in 8 equal quarterly installments thereafter so long as the Optionee remains an employee of the Company or a Subsidiary on such vesting dates. Once exercisable, this Stock Option shall continue to be exercisable at any time or times prior to the close of business on the Expiration Date, subject to the provisions hereof and of the Plan.

2.Manner of Exercise.

(a)The Optionee may exercise this Stock Option only in the following manner: from time to time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice to the Administrator of his or her election to purchase some or all of the Option Shares purchasable at the time of such notice. This notice shall specify the number of Option Shares to be purchased.

Payment of the purchase price for the Option Shares may be made by one or more of the following methods: (i) in cash, by certified or bank check or other instrument acceptable to the Administrator; (ii) through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the Optionee on the open market or that are beneficially owned by the Optionee and are not then subject to any restrictions under any Company plan and that otherwise satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee delivering to the Company a properly executed exercise notice together with irrevocable

instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the option purchase price, provided that in the event the Optionee chooses to pay the option purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure; or (iv) a combination of (i), (ii) and (iii) above. Payment instruments will be received subject to collection.

The transfer to the Optionee on the records of the Company or of the transfer agent of the Option Shares will be contingent upon (i) the Company’s receipt from the Optionee of the full purchase price for the Option Shares, as set forth above, (ii) the fulfillment of any other requirements contained herein or in the Plan or in any other agreement or provision of laws, and (iii) the receipt by the Company of any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be in compliance with applicable laws and regulations. In the event the Optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of the Shares attested to.

(b)The shares of Stock purchased upon exercise of this Stock Option shall be transferred to the Optionee on the records of the Company or of the transfer agent upon compliance to the satisfaction of the Administrator with all requirements under applicable laws or regulations in connection with such transfer and with the requirements hereof and of the Plan. The determination of the Administrator as to such compliance shall be final and binding on the Optionee. The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Stock subject to this Stock Option unless and until this Stock Option shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall have transferred the shares to the Optionee, and the Optionee’s name shall have been entered as the stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Stock.

(c)The minimum number of shares with respect to which this Stock Option may be exercised at any one time shall be 100 shares, unless the number of shares with respect to which this Stock Option is being exercised is the total number of shares subject to exercise under this Stock Option at the time.

(d)Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the Expiration Date hereof.

3.Termination of Employment. If the Optionee’s employment by the Company or a Subsidiary (as defined in the Plan) is terminated, the period within which to exercise the Stock Option may be subject to earlier termination as set forth below.

(a)Termination Due to Death. If the Optionee’s employment terminates by reason of the Optionee’s death, any portion of this Stock Option outstanding on such date shall become fully exercisable and may thereafter be exercised by the Optionee’s legal representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier.

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(b)Termination Due to Disability. If the Optionee’s employment terminates by reason of the Optionee’s disability (as determined by the Administrator), any portion of this Stock Option outstanding on such date shall become fully exercisable and may thereafter be exercised by the Optionee for a period of 12 months from the date of termination or until the Expiration Date, if earlier.

(c)Termination for Cause. If the Optionee’s employment terminates for Cause (as defined below), any portion of this Stock Option outstanding on such date shall terminate immediately and be of no further force and effect.

(d)Other Termination. If the Optionee’s employment terminates for any reason other than the Optionee’s death, the Optionee’s disability, or Cause, and unless otherwise determined by the Administrator, any portion of this Stock Option outstanding on such date may be exercised, to the extent exercisable on the date of termination, for a period of three months from the date of termination or until the Expiration Date, if earlier. Any portion of this Stock Option that is not exercisable on the date of termination shall terminate immediately and be of no further force or effect.

(e)Termination in Connection with a Sale Event. If the Optionee’s employment is terminated by the Company without Cause or by the Optionee for Good Reason in either case within 24 months after a Sale Event, this Stock Option shall immediately become 100% vested and exercisable as of the date of such termination.

For purposes of this Agreement, “Cause” shall mean the occurrence of any one or more of the following events: (i) conduct by the Optionee constituting a material act of willful misconduct in connection with the performance of Optionee’s duties to the Company, including, without limitation, misappropriation of funds or property of the Company or any of its subsidiaries or affiliates other than the occasional, customary and de minimis use of Company property for personal purposes; or (ii) the commission by the Optionee of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty or fraud, or any conduct by the Optionee that would reasonably be expected to result in material injury to the Company or any of its subsidiaries and affiliates if he were retained in his position; or (iii) willful and deliberate material non-performance by the Optionee of his duties to the Company (other than by reason of the Optionee’s physical or mental illness, incapacity or disability) which has continued for more than 30 days following written notice of such non-performance from the Company; or  (iv) a breach by the Optionee of any of the provisions contained any agreements between Optionee and the Company relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions; or (v) a material violation by the Optionee of the Company’s employment policies which has continued following written notice of such violation from the Company; or (vi) willful failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the willful inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation.  For purposes of clauses (i), (iii) or (vi) hereof, no act, or failure to act, on Optionee’s part shall be deemed “willful” unless done, or

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omitted to be done, by the Optionee without reasonable belief that the Optionee’s act or failure to act, was in the best interest of the Company and its subsidiaries and affiliates.

For purposes of this Agreement, “Good Reason” shall mean that the Optionee has complied with the “Good Reason Process” (hereinafter defined) following the occurrence of any of the following events: (i) a material diminution in Optionee’s responsibilities, authority or duties; or (ii) a material reduction in Optionee’s then current base salary except for across-the-board salary reductions similarly affecting all or substantially all similarly situated employees; or (iii) the relocation of the Company offices at which the Optionee is principally employed to a location more than 30 miles from such offices. For purposes of clause (i) hereof, a change in the reporting relationship, or a change in a title will not, by itself, be sufficient to constitute a material diminution of responsibilities, authority or duty. “Good Reason Process” shall mean: (i) Optionee reasonably determines in good faith that a “Good Reason” condition has occurred; (ii) Optionee notifies the Company in writing of the occurrence of the Good Reason condition within 30 days of the occurrence of such condition; (iii) Optionee cooperates in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist following the Cure Period; and (v) Optionee terminates his employment within 30 days after the end of the Cure Period. If the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

The Administrator’s determination of the reason for termination of the Optionee’s employment shall be conclusive and binding on the Optionee and his or her representatives or legatees.

4.Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

5.Transferability. This Agreement is personal to the Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution. This Stock Option is exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or legatee.

6.Status of the Stock Option. This Stock Option is intended to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), but the Company does not represent or warrant that this Stock Option qualifies as such. The Optionee should consult with his or her own tax advisors regarding the tax effects of this Stock Option and the requirements necessary to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements. To the extent any portion of this Stock Option does not so qualify as an “incentive stock option,” such portion shall be deemed to be a non-qualified stock option. If the Optionee intends to dispose or does dispose (whether by sale, gift, transfer or otherwise) of any Option Shares within the one-year period beginning on the date after the transfer of such shares to him or her, or within the

4

two-year period beginning on the day after the grant of this Stock Option, he or she will so notify the Company within 30 days after such disposition.

7.Tax Withholding. The Optionee shall, not later than the date as of which the exercise of this Stock Option becomes a taxable event for Federal income tax purposes, pay to the Company or make arrangements satisfactory to the Administrator for payment of any Federal, state, and local taxes required by law to be withheld on account of such taxable event. The Company shall have the authority to cause the minimum required tax withholding obligation to be satisfied, in whole or in part, by withholding from shares of Stock to be issued to the Optionee a number of shares of Stock with an aggregate Fair Market Value that would satisfy the withholding amount due.

8.No Obligation to Continue Employment. Neither the Company nor any Subsidiary is obligated by or as a result of the Plan or this Agreement to continue the Optionee in employment and neither the Plan nor this Agreement shall interfere in any way with the right of the Company or any Subsidiary to terminate the employment of the Optionee at any time.

9.Integration. This Agreement constitutes the entire agreement between the parties with respect to this Stock Option and supersedes all prior agreements and discussions between the parties concerning such subject matter.

10.Data Privacy Consent. In order to administer the Plan and this Agreement and to implement or structure future equity grants, the Company, its subsidiaries and affiliates and certain agents thereof (together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification number, home address and telephone number, date of birth and other information that is necessary or desirable for the administration of the Plan and/or this Agreement (the “Relevant Information”). By entering into this Agreement, the Optionee (i) authorizes the Company to collect, process, register and transfer to the Relevant Companies all Relevant Information; (ii) waives any privacy rights the Optionee may have with respect to the Relevant Information; (iii) authorizes the Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in which the Relevant Companies consider appropriate. The Optionee shall have access to, and the right to change, the Relevant Information. Relevant Information will only be used in accordance with applicable law.

11.Notices. Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Optionee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

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12.Clawback. The Optionee agrees and acknowledges that the entire Stock Option, whether or not vested or exercised, is subject to the terms and provisions of the Company’s Policy for Recoupment of Incentive Compensation, to the extent applicable.

INSULET CORPORATION

______________________________

By:    Patrick J. Sullivan
Title: Chief Executive Officer

______________________________Optionee NameOptionee Acceptance Date

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EX-10.5

EXHIBIT 10.5

INSULET CORPORATION FOURTH AMENDED AND RESTATED

2007 EMPLOYEE STOCK PURCHASE PLAN

The purpose of the Insulet Corporation Fourth Amended and Restated 2007 Employee Stock Purchase Plan (“the Plan”) is to provide eligible employees of Insulet Corporation (the “Company”) and each Designated Subsidiary (as defined in Section 11) with opportunities to purchase shares of the Company’s common stock, par value $.001 per share (the “Common Stock”). 380,000 shares of Common Stock in the aggregate have been approved and reserved for this purpose. The Plan is intended to constitute an “employee stock purchase plan” within the meaning of Section 423(b) of the Internal Revenue Code of 1986, as amended (the “Code”), and shall be interpreted in accordance with that intent.

1.    Administration. The Plan will be administered by the person or persons (the “Administrator”) appointed by the Company’s Board of Directors (the “Board”) for such purpose. The Administrator has authority at any time to: (i) adopt, alter and repeal such rules, guidelines and practices for the administration of the Plan and for its own acts and proceedings as it shall deem advisable; (ii) interpret the terms and provisions of the Plan; (iii) make all determinations it deems advisable for the administration of the Plan; (iv) decide all disputes arising in connection with the Plan; and (v) otherwise supervise the administration of the Plan. All interpretations and decisions of the Administrator shall be binding on all persons, including the Company and the Participants. No member of the Board or individual exercising administrative authority with respect to the Plan shall be liable for any action or determination made in good faith with respect to the Plan or any option granted hereunder.

2.    Offerings. The Company will make one or more offerings to eligible employees to

EXHIBIT 10.5

purchase Common Stock under the Plan (“Offerings”). The initial Offering began on the date of the Company’s Initial Public Offering and ended on December 31, 2007 (the “Initial Offering”). Between January 1, 2008 and June 30, 2016, Offerings began on the first business day occurring on or after each January 1 and July 1 and ended on the last business day occurring on or before the following June 30 and December 31, respectively. Beginning as of July 1, 2016, unless otherwise determined by the Administrator, an Offering will begin on the first business day occurring on or after each December 1 and June 1 and will end on the last business day occurring on or before the following May 31 and November 30, respectively, provided, however, that to permit a transition to this new Offering cycle, a one-time Offering period will begin on July 1, 2016 and will end on November 30, 2016. The Administrator may, in its discretion, designate a different period for any Offering, provided that no Offering shall exceed six months in duration or overlap any other Offering.

3.    Eligibility. All individuals classified as employees on the payroll records of the Company and each Designated Subsidiary are eligible to participate in any one or more of the Offerings under the Plan, provided that they are employed by the Company on the date that is 20 business days before the first day of the applicable Offering (the “Offering Date”) and, as of the Offering Date, they are customarily employed by the Company or a Designated Subsidiary for at least 20 hours a week. Notwithstanding any other provision herein, individuals who are not contemporaneously classified as employees of the Company or a Designated Subsidiary for purposes of the Company’s or applicable Designated Subsidiary’s payroll system are not considered to be eligible employees of the Company or any Designated Subsidiary and shall not be eligible to participate in the Plan. In the event any such individuals are reclassified as

EXHIBIT 10.5

employees of the Company or a Designated Subsidiary for any purpose, including, without limitation, common law or statutory employees, by any action of any third party, including, without limitation, any government agency, or as a result of any private lawsuit, action or administrative proceeding, such individuals shall, notwithstanding such reclassification, remain ineligible for participation. Notwithstanding the foregoing, the exclusive means for individuals who are not contemporaneously classified as employees of the Company or a Designated Subsidiary on the Company’s or Designated Subsidiary’s payroll system to become eligible to participate in this Plan is through an amendment to this Plan, duly executed by the Company, which specifically renders such individuals eligible to participate herein.

4.    Participation.

(a)    Participants on Effective Date. Each eligible employee at the time of the Initial Public Offering shall be deemed to be a Participant at such time. If an eligible employee is deemed to be a Participant pursuant to this Section 4(a), such individual shall be deemed not to have authorized payroll deductions and shall not purchase any Common Stock hereunder unless he or she thereafter authorizes payroll deductions by submitting an enrollment form (in the manner described in Section 4(c)) by the end of the Initial Offering. If such a Participant does not authorize payroll deductions by submitting an enrollment form by the end of the Initial Offering, that Participant will be deemed to have withdrawn from the Plan.

(b)    Participants in Subsequent Offerings. An eligible employee who is not a Participant on any Offering Date may participate in such Offering by submitting an enrollment form to his or her appropriate payroll location at least 15 business days before the Offering Date (or by such other deadline as shall be established by the Administrator for the Offering).

EXHIBIT 10.5

(c)    Enrollment. The enrollment form will (a) state the amount to be deducted from an eligible employee’s Compensation (as defined in Section 11) per pay period, (b) authorize the purchase of Common Stock in each Offering in accordance with the terms of the Plan and (c) specify the exact name or names in which shares of Common Stock purchased for such individual are to be issued pursuant to Section 10. An employee who does not enroll in accordance with these procedures will be deemed to have waived the right to participate. Unless a Participant files a new enrollment form or withdraws from the Plan, such Participant’s deductions and purchases will continue at the same amount of Compensation for future Offerings, provided he or she remains eligible.

(d)    Notwithstanding the foregoing, participation in the Plan will neither be permitted nor be denied contrary to the requirements of the Code.

5.    Employee Contributions. Each eligible employee may authorize payroll deductions at a minimum of 10 dollars ($10) per pay period up to a maximum of 10% of such employee’s Compensation for each pay period. The Company will maintain book accounts showing the amount of payroll deductions made by each Participant for each Offering. No interest will accrue or be paid on payroll deductions.

6.    Deduction Changes. Except in the event of a Participant increasing his or her payroll deduction from 0 percent during the first Offering as specified in Section 4(a) or as may be determined by the Administrator in advance of an Offering, a Participant may not increase or decrease his or her payroll deduction during any Offering, but may increase or decrease his or her payroll deduction with respect to the next Offering (subject to the limitations of Section 5) by filing a new enrollment form at least 15 business days before the next Offering Date (or by such other deadline as shall be established by the Administrator for the Offering). The Administrator

EXHIBIT 10.5

may, in advance of any Offering, establish rules permitting a Participant to increase, decrease or terminate his or her payroll deduction during an Offering.

7.    Withdrawal. A Participant may withdraw from participation in the Plan by delivering a written notice of withdrawal to his or her appropriate payroll location. The Participant’s withdrawal will be effective as of the next business day. Following a Participant’s withdrawal, the Company will promptly refund such individual’s entire account balance under the Plan to him or her (after payment for any Common Stock purchased before the effective date of withdrawal). Partial withdrawals are not permitted. Such an employee may not begin participation again during the remainder of the Offering, but may enroll in a subsequent Offering in accordance with Section 4.

8.    Grant of Options. On each Offering Date, the Company will grant to each eligible employee who is then a Participant in the Plan an option (“Option”) to purchase on the last day of such Offering (the “Exercise Date”), at the Option Price hereinafter provided for, the lowest of (a) a number of shares of Common Stock determined by dividing such Participant’s accumulated payroll deductions on such Exercise Date by the Option Price (as defined herein), (b) 800 shares of Common Stock, or (c) such other lesser maximum number of shares as shall have been established by the Administrator in advance of the Offering; provided, however, that such Option shall be subject to the limitations set forth below. Each Participant’s Option shall be exercisable only to the extent of such Participant’s accumulated payroll deductions on the Exercise Date. For all Offerings ending on or before June 30, 2016, the purchase price for each share purchased under each Option (the “Option Price”) will be 85 percent of the Fair Market Value of the Common Stock on the Exercise Date. For all Offerings beginning on or after July 1, 2016, the Option Price will be 85 percent of the lower of (i) the Fair Market Value of the Common Stock on

EXHIBIT 10.5

the first business day during the respective Offering or (ii) the Fair Market Value of the Common Stock on the Exercise Date.

Notwithstanding the foregoing, no Participant may be granted an option hereunder if such Participant, immediately after the option was granted, would be treated as owning stock possessing 5 percent or more of the total combined voting power or value of all classes of stock of the Company or any Parent or Subsidiary (as defined in Section 11). For purposes of the preceding sentence, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of a Participant, and all stock which the Participant has a contractual right to purchase shall be treated as stock owned by the Participant. In addition, no Participant may be granted an Option which permits his or her rights to purchase stock under the Plan, and any other employee stock purchase plan of the Company and its Parents and Subsidiaries, to accrue at a rate which exceeds $25,000 of the fair market value of such stock (determined on the option grant date or dates) for each calendar year in which the Option is outstanding at any time. The purpose of the limitation in the preceding sentence is to comply with Section 423(b)(8) of the Code and shall be applied taking Options into account in the order in which they were granted.

9.    Exercise of Option and Purchase of Shares. Each employee who continues to be a Participant in the Plan on the Exercise Date shall be deemed to have exercised his or her Option on such date and shall acquire from the Company such number of whole shares of Common Stock reserved for the purpose of the Plan as his or her accumulated payroll deductions on such date will purchase at the Option Price, subject to any other limitations contained in the Plan; provided that, with respect to the Initial Offering, the exercise of each Option shall be conditioned on the closing of the Company’s Initial Public Offering on or before the Exercise Date. Any amount remaining in a Participant’s account at the end of an Offering solely by reason of the

EXHIBIT 10.5

inability to purchase a fractional share will be carried forward to the next Offering; any other balance remaining in a Participant’s account at the end of an Offering will be refunded to the Participant promptly.

10.    Issuance of Certificates. Certificates representing shares of Common Stock purchased under the Plan may be issued only in the name of the employee, in the name of the employee and another person of legal age as joint tenants with rights of survivorship, or in the name of a broker authorized by the employee to be his, her or their, nominee for such purpose.

11.    Definitions.

The term “Compensation” means the amount of base pay, prior to salary reduction pursuant to Sections 125, 132(f) or 401(k) of the Code, but excluding overtime, commissions, incentive or bonus awards, allowances and reimbursements for expenses such as relocation allowances or travel expenses, income or gains on the exercise of Company stock options, and similar items.

The term “Designated Subsidiary” means any present or future Subsidiary (as defined below) that has been designated by the Board to participate in the Plan. The Board may so designate any Subsidiary, or revoke any such designation, at any time and from time to time, either before or after the Plan is approved by the stockholders. The current list of Designated Subsidiaries is attached hereto as Appendix A.

The term “Fair Market Value of the Common Stock” on any given date means the fair market value of the Common Stock determined in good faith by the Administrator; provided, however, that if the Common Stock is admitted to quotation on the National Association of

EXHIBIT 10.5

Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ Global Market or another national securities exchange, the determination shall be made by reference to the closing price on such securities exchange. If there is no closing price for such date, the determination shall be made by reference to the last date preceding such date for which there is a closing price. Notwithstanding the foregoing, if the date for which Fair Market Value of the Common Stock is determined is the first day when trading prices for the Common Stock are reported on NASDAQ or another national securities exchange, the Fair Market Value of the Common Stock shall be the “Price to the Public” (or equivalent) set forth on the cover page for the final prospectus relating to the Company’s Initial Public Offering.

The term “Initial Public Offering” means the consummation of the first fully underwritten, firm commitment public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale by the Company of its Common Stock.

The term “Parent” means a “parent corporation” with respect to the Company, as defined in Section 424(e) of the Code.

The term “Participant” means an individual who is eligible as determined in Section 3 and who has complied with the provisions of Section 4.

The term “Subsidiary” means a “subsidiary corporation” with respect to the Company, as defined in Section 424(f) of the Code.

12.    Rights on Termination of Employment. If a Participant’s employment terminates for any reason before the Exercise Date for any Offering, no payroll deduction will be taken from any pay due and owing to the Participant and the balance in the Participant’s account will be paid to such Participant or, in the case of such Participant’s death, to his or her designated beneficiary

EXHIBIT 10.5

as if such Participant had withdrawn from the Plan under Section 7. An employee will be deemed to have terminated employment, for this purpose, if the corporation that employs him or her, having been a Designated Subsidiary, ceases to be a Subsidiary, or if the employee is transferred to any corporation other than the Company or a Designated Subsidiary. An employee will not be deemed to have terminated employment for this purpose, if the employee is on an approved leave of absence for military service or sickness or for any other purpose approved by the Company, if the employee’s right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise provides in writing.

13.    Special Rules. Notwithstanding anything herein to the contrary, the Administrator may adopt special rules applicable to the employees of a particular Designated Subsidiary, whenever the Administrator determines that such rules are necessary or appropriate for the implementation of the Plan in a jurisdiction where such Designated Subsidiary has employees; provided that such rules are consistent with the requirements of Section 423(b) of the Code. Such special rules may include (by way of example, but not by way of limitation) the establishment of a method for employees of a given Designated Subsidiary to fund the purchase of shares other than by payroll deduction, if the payroll deduction method is prohibited by local law or is otherwise impracticable. Any special rules established pursuant to this Section 13 shall, to the extent possible, result in the employees subject to such rules having substantially the same rights as other Participants in the Plan.

Participants that are employed by a Designated Subsidiary or which are otherwise resident in the Designated Subsidiary’s jurisdiction of incorporation are subject to the terms set out in that Designated Subsidiary’s Appendix hereto. The terms in such Appendix hereto and

EXHIBIT 10.5

those otherwise set out in the Plan shall be read together and construed, to the fullest extent possible, to be in concert with each other. To the extent that they cannot be so construed, then in the event of any direct conflict between the terms in such Appendix and those otherwise set out in the Plan, the terms in such Appendix will prevail.

14.    Optionees Not Stockholders. Neither the granting of an Option to a Participant nor the deductions from his or her pay shall constitute such Participant a holder of the shares of Common Stock covered by an Option under the Plan until such shares have been purchased by and issued to him or her.

15.    Rights Not Transferable. Rights under the Plan are not transferable by a Participant other than by will or the laws of descent and distribution, and are exercisable during the Participant’s lifetime only by the Participant.

16.    Application of Funds. All funds received or held by the Company under the Plan may be combined with other corporate funds and may be used for any corporate purpose.

17.    Adjustment in Case of Changes Affecting Common Stock. In the event of a subdivision of outstanding shares of Common Stock, the payment of a dividend in Common Stock or any other change affecting the Common Stock, the number of shares approved for the Plan and the share limitation set forth in Section 8 shall be equitably or proportionately adjusted to give proper effect to such event.

18.    Amendment of the Plan. The Board may at any time and from time to time amend the Plan in any respect, except that without the approval within 12 months of such Board action by the stockholders, no amendment shall be made increasing the number of shares approved for the Plan or making any other change that would require stockholder approval in order for the

EXHIBIT 10.5

Plan, as amended, to qualify as an “employee stock purchase plan” under Section 423(b) of the Code.

19.    Insufficient Shares. If the total number of shares of Common Stock that would otherwise be purchased on any Exercise Date plus the number of shares purchased under previous Offerings under the Plan exceeds the maximum number of shares issuable under the Plan, the shares then available shall be apportioned among Participants in proportion to the amount of payroll deductions accumulated on behalf of each Participant that would otherwise be used to purchase Common Stock on such Exercise Date.

20.    Termination of the Plan. The Plan may be terminated at any time by the Board. Upon termination of the Plan, all amounts in the accounts of Participants shall be promptly refunded.

21.    Governmental Regulations. The Company’s obligation to sell and deliver Common Stock under the Plan is subject to obtaining all governmental approvals required in connection with the authorization, issuance, or sale of such stock.

22.    Governing Law. This Plan and all Options and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles.

23.    Issuance of Shares. Shares may be issued upon exercise of an Option from authorized but unissued Common Stock, from shares held in the treasury of the Company, or from any other proper source.

24.    Tax Withholding. Participation in the Plan is subject to any minimum required tax withholding on income of the Participant in connection with the Plan. Each Participant agrees, by

EXHIBIT 10.5

entering the Plan, that the Company and its Subsidiaries shall have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant, including shares issuable under the Plan.

25.    Notification Upon Sale of Shares. Each Participant agrees, by entering the Plan, to give the Company prompt notice of any disposition of shares purchased under the Plan where such disposition occurs within two years after the date of grant of the Option pursuant to which such shares were purchased.

26.    Effective Date and Approval of Shareholders. The Plan shall take effect on the date of the Company’s Initial Public Offering, subject to approval by the holders of a majority of the votes cast at a meeting of stockholders at which a quorum is present or by written consent of the stockholders.

DATE PLAN APPROVED BY BOARD OF DIRECTORS: April 27, 2007

DATE PLAN APPROVED BY STOCKHOLDERS: April 27, 2007

EFFECTIVE DATE OF PLAN: May 14, 2007

DATE FIRST AMENDMENT TO PLAN APPROVED BY BOARD OF DIRECTORS: May 5,

2010

DATE ADDITIONAL DESIGNATED SUBSIDIARIES APPROVED BY BOARD OF

DIRECTORS: November 21, 2011

DATE SECOND AMENDMENT TO PLAN APPROVED BY BOARD OF DIRECTORS:     

February 12, 2014

DATE THIRD AMENDMENT TO PLAN APPROVED BY BOARD OF DIRECTORS:

EXHIBIT 10.5

November 19, 2015

DATE FOURTH AMENDMENT TO PLAN APPROVED BY BOARD OF DIRECTORS:

May 11, 2016

APPENDIX A

Designated Subsidiaries

Sub-Q Solutions, Inc. Insulet Singapore PTE LTD Insulet Canada Corporation

APPENDIX B

Additional Terms Applicable to Participants Employed by Insulet Canada Corporation or otherwise resident in Canada

1.    Voluntary Acceptance. By accepting this grant of securities, you represent and warrant to the Company that your participation in the trade and acceptance of such securities is voluntary and that you have not been induced to participate by expectation of engagement, appointment, employment or continued engagement, appointment or employment, as applicable.

2.    Termination of Employment. Notwithstanding Section 12 of the Plan, a Participant’s employment is deemed to have terminated on the Participant’s last day of actual and active employment and that no period of notice or payment in lieu of notice that is given or ought to have been given which follows or is in respect of a period which follows a Participant’s last day of actual and active employment will be deemed to extend the Participant’s period of employment for the purposes of determining his or her entitlements under the Plan.

3.    Personal Information. The Company will collect, use and disclose Participants’ personal information in accordance with applicable privacy legislation and the Company and Insulet Canada Corporation’s privacy policies. The Participant consents to collection, use and disclosure of personal information for all purposes relating to the administration of the ESPP, including without limitation, relating to, (i) administering and maintaining Participant records; (ii) providing information to the Administrator, including to third party administrators of the Plan; (iii) providing information to future purchasers or merger partners of the Company; and

transferring information about the Participant to a country or territory that may not provide the same statutory protection for the information as the Participant’s home country.

4.    Foreign Exchange Issues. On each Exercise Date, the Company will convert the contributions made by each Participant during the Offering from Canadian Dollars to U.S. Dollars on the Exercise Date based on the Exercise Date exchange rates provided by the Company’s Accounting Department (the “Exchange Rate”). Options shall be purchased in U.S. Dollars. Any amount remaining in a Participant’s account at the end of an Offering shall be converted back to Canadian Dollars using the Exchange Rate and either carried forward to the next Offering or refunded to Participant as provided in Section 9. The $25,000 limit contained in Section 8 of the Plan shall be measured in U.S. Dollars.

5.    French Language. It is the express wish of the parties to this document, and all related documents be drafted in English. Les parties aux présentes conviennent et exigent que cet document, ainsi que tous les documents qui s'y rattachent soient rédigés en langue anglaise.

*****

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Patrick J. Sullivan, certify that:    

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/ Patrick J. Sullivan

Patrick J. Sullivan

President and Chief Executive Officer

Date: August 4, 2016

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Michael L. Levitz, certify that:

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/ Michael L. Levitz

Michael L. Levitz

Chief Financial Officer

Date: August 4, 2016

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Insulet Corporation, a Delaware corporation (the “Company”), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the period ended June 30, 2016, as filed with the Securities and Exchange Commission (the “Report”) that, to their knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Patrick J. Sullivan                                      

Patrick J. Sullivan

President and Chief Executive Officer

Date: August 4, 2016

/s/ Michael L. Levitz

Michael L. Levitz

Chief Financial Officer

Date: August 4, 2016

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 02, 2016
Document Documentand Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	PODD
Entity Registrant Name	INSULET CORP
Entity Central Index Key	0001145197
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding (in shares)		57,267,862

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current Assets
Cash and cash equivalents	$ 75,661	$ 122,672
Short-term investments	35,605	0
Accounts receivable, net	38,700	42,530
Inventories, net	24,486	12,024
Prepaid expenses and other current assets	6,838	4,283
Current assets of discontinued operations	0	9,252
Total current assets	181,290	190,761
Property and equipment, net	41,131	41,793
Other intangible assets, net	773	933
Goodwill	39,763	39,607
Other assets	88	76
Long-term assets of discontinued operations	0	1,956
Total assets	263,045	275,126
Current Liabilities
Accounts payable	21,605	15,213
Accrued expenses and other current liabilities (Note 12)	29,938	36,744
Deferred revenue	1,323	2,361
Current portion of capital lease obligations	2,315	5,519
Current liabilities of discontinued operations	0	5,319
Total current liabilities	55,181	65,156
Capital lease obligations	0	269
Long-term debt, net of discount	175,690	171,698
Other long-term liabilities	4,730	3,952
Total liabilities	235,601	241,075
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $.001 par value: Authorized: 5,000,000 shares at June 30, 2016 and December 31, 2015 Issued and outstanding: zero shares at June 30, 2016 and December 31, 2015	0	0
Common stock, $.001 par value: Authorized: 100,000,000 shares at June 30, 2016 and December 31, 2015. Issued and outstanding: 57,240,894 and 56,954,830 shares at June 30, 2016 and December 31, 2015, respectively	57	57
Additional paid-in capital	695,854	686,193
Accumulated other comprehensive loss	(243)	(654)
Accumulated deficit	(668,224)	(651,545)
Total stockholders’ equity	27,444	34,051
Total liabilities and stockholders’ equity	$ 263,045	$ 275,126

XML

Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
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)	57,240,894	56,954,830
Common stock, outstanding (in shares)	57,240,894	56,954,830

XML

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Revenue	$ 87,330	$ 60,551	$ 168,543	$ 108,699
Cost of revenue	36,873	30,036	74,035	48,991
Gross profit	50,457	30,515	94,508	59,708
Operating expenses:
Research and development	12,953	12,069	25,942	20,276
Sales and marketing	22,950	19,008	46,972	33,718
General and administrative	15,842	13,497	30,581	27,039
Total operating expenses	51,745	44,574	103,495	81,033
Operating loss	(1,288)	(14,059)	(8,987)	(21,325)
Interest expense	3,127	3,221	6,223	6,400
Other income, net	129	28	299	55
Interest expense and other income, net	(2,998)	(3,193)	(5,924)	(6,345)
Loss from continuing operations before income taxes	(4,286)	(17,252)	(14,911)	(27,670)
Income tax expense	65	15	129	39
Net loss from continuing operations	(4,351)	(17,267)	(15,040)	(27,709)
Income (loss) from discontinued operations, net of tax ($0 and $22 for the three months ended June 30, 2016 and 2015, respectively and $408 and $50 for the six months ended June 30, 2016 and 2015, respectively.	153	1,835	(1,639)	443
Net loss	$ (4,198)	$ (15,432)	$ (16,679)	$ (27,266)
Net loss per share basic and diluted
Net loss from continuing operations per share basic and diluted (in dollars per share)	$ (0.08)	$ (0.30)	$ (0.26)	$ (0.49)
Net income (loss) from discontinued operations per share basic and diluted (in dollars per share)	$ 0.00	$ 0.03	$ (0.03)	$ 0.01
Weighted-average number of shares used in calculating net loss per share (in shares)	57,195,963	56,808,489	57,112,769	56,653,430

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Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Discontinued operations, tax	$ 0	$ 22	$ 408	$ 50

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Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (4,198)	$ (15,432)	$ (16,679)	$ (27,266)
Other comprehensive income, net of tax
Foreign currency translation adjustment, net of tax	3	0	403	3
Unrealized gain on available-for-sale securities	8	0	8	0
Total other comprehensive income, net of tax	11	0	411	3
Total comprehensive loss	$ (4,187)	$ (15,432)	$ (16,268)	$ (27,263)

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities
Net loss	$ (16,679)	$ (27,266)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	6,845	7,114
Non-cash interest	3,992	3,789
Stock-based compensation expense	10,784	9,630
Provision for bad debts	1,074	1,180
Other	132	0
Changes in operating assets and liabilities:
Accounts receivable	3,672	6,876
Inventories	(13,099)	(10,336)
Prepaid expenses and other assets	(2,205)	632
Accounts payable, accrued expenses and other current liabilities	(1,097)	4,997
Deferred revenue	(1,020)	534
Other long-term liabilities	765	147
Net cash used in operating activities	(6,836)	(2,703)
Cash flows from investing activities
Purchases of property and equipment	(5,905)	(4,601)
Purchases of short-term investments	(35,597)	0
Proceeds from divestiture of business, net	5,714	0
Net cash used in investing activities	(35,788)	(4,601)
Cash flows from financing activities
Principal payments of capital lease obligations	(3,472)	(2,814)
Proceeds from issuance of common stock, net of offering costs	1,490	6,489
Payment of withholding taxes in connection with vesting of restricted stock units	(2,610)	(2,427)
Net cash (used in) provided by financing activities	(4,592)	1,248
Effect of exchange rate changes on cash	205	0
Net decrease in cash and cash equivalents	(47,011)	(6,056)
Cash and cash equivalents, beginning of period	122,672	151,193
Cash and cash equivalents, end of period	75,661	145,137
Non-cash investing and financing activities
Purchases of property and equipment under capital lease	$ 0	$ 5,721

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Nature of the Business

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of the Business

Nature of the Business

Insulet Corporation, the "Company," is primarily engaged in the development, manufacturing and sale of its proprietary Omnipod Insulin Management System (the “Omnipod System”), an innovative, discreet and easy-to-use insulin infusion system for people with insulin-dependent diabetes. The Omnipod System features a small, lightweight, self-adhesive disposable tubeless Omnipod device which is worn on the body for approximately three days at a time and its wireless companion, the handheld PDM. Conventional insulin pumps require people with insulin-dependent diabetes to learn to use, manage and wear a number of cumbersome components, including up to 42 inches of tubing. In contrast, the Omnipod System features only two discreet, easy-to-use devices that eliminate the need for a bulky pump, tubing and separate blood glucose meter, provides for virtually pain-free automated cannula insertion, communicates wirelessly and integrates a blood glucose meter.

The Company acquired Neighborhood Holdings, Inc. and its wholly-owned subsidiaries (collectively, “Neighborhood Diabetes”) in June 2011. Through Neighborhood Diabetes, the Company provided customers with blood glucose testing supplies, traditional insulin pumps, pump supplies and pharmaceuticals and had the ability to process claims as either durable medical equipment or through pharmacy benefits. In February 2016, the Company sold Neighborhood Diabetes to Liberty Medical LLC ("Liberty Medical"). Additional information regarding the disposition and treatment of the Neighborhood Diabetes business as discontinued operations is provided in note 3 to the consolidated financial statements included in this Form 10-Q.

Commercial sales of the Omnipod System began in the United States in 2005. The Company sells the Omnipod System and other diabetes management supplies in the United States through direct sales to customers or through its distribution partners. The Omnipod System is currently available in multiple countries in Europe, Canada and Israel.

In addition to using the Pod for insulin delivery, the Company also partners with global pharmaceutical and biotechnology companies to tailor the Omnipod technology platform for the delivery of subcutaneous drugs across multiple therapeutic areas.    

In July 2015, the Company executed an asset purchase agreement whereby it acquired the Canadian Omnipod distribution operations from GlaxoSmithKline ("GSK"). With the acquisition, the Company assumed all distribution, sales, marketing, training and support activities for the Omnipod system in Canada.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The unaudited consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016, or for any other subsequent interim period.

The unaudited consolidated financial statements in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with 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. The most significant estimates used in these financial statements include the valuation of stock-based compensation expense, acquired businesses, accounts receivable, inventories, goodwill, deferred revenue, equity instruments, the lives of property and equipment and intangible assets, as well as warranty and doubtful accounts allowance reserve calculations. Actual results may differ from those estimates.

Foreign Currency Translation

For foreign operations, asset and liability accounts are translated at exchange rates as of the balance sheet date; income and expenses are translated using weighted average exchange rates for the reporting period. Resulting translation adjustments are reported in accumulated other comprehensive loss, a separate component of stockholders' equity. Gains and losses arising from transactions and translation of period-end balances denominated in currencies other than the functional currency, primarily the Canadian dollar, are included in other income, net, and were not material in the three and six months ended June 30, 2016 and 2015.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

For the purpose of the financial statement classification, the Company considers all highly-liquid investment instruments with original maturities of 90 days or less, when purchased, to be cash equivalents. Cash equivalents include money market mutual funds, corporate bonds, U.S. government and agency bonds and certificates of deposit which are carried at their fair value. Outstanding letters of credit, related to security deposits for lease obligations, totaled $1.2 million as of June 30, 2016 and December 31, 2015.

Investments

Investment securities consist of available-for-sale marketable securities and are carried at fair value with unrealized gains or losses included as a component of other comprehensive loss in shareholders' equity. Investments, exclusive of cash equivalents, with a stated maturity date of one year or less from the balance sheet date or that are expected to be used in current operations, are classified as short-term investments.

The Company reviews investments for other-than-temporary impairment when the fair value of an investment is less than its amortized cost. If an available-for-sale security is other than temporarily impaired, the loss is charged to either earnings or shareholders' equity depending on the Company's intent and ability to retain the security until the full cost basis can be recovered.

Property and Equipment

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the respective assets. Leasehold improvements are amortized over their useful life or the life of the lease, whichever is shorter. Assets acquired under capital leases are amortized in accordance with the respective class of owned assets and the amortization is included with depreciation expense. Maintenance and repair costs are expensed as incurred.

Property and equipment included $34.8 million and $28.2 million of accumulated depreciation as of June 30, 2016 and December 31, 2015, respectively.

Goodwill

Goodwill represents the excess of the cost of acquired businesses over the fair value of identifiable net assets acquired. The Company follows the provisions of Financial Accounting Standards Board ("FASB") ASC 350-20, Intangibles - Goodwill and Other (“ASC 350-20”). The Company performs an assessment of its goodwill for impairment on at least an annual basis or whenever events or changes in circumstances indicate there might be impairment. The Company's annual impairment test date is October 1st.

As the Company operates in one segment, the Company has considered whether that segment contains multiple reporting units. The Company has concluded that there is a single reporting unit as the Company does not have segment managers and discrete financial information below consolidated results is not reviewed on a regular basis. Based on this conclusion, goodwill was tested for impairment at the enterprise level. The Company has the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of its sole reporting unit is less than its carrying amount. This qualitative analysis is used as a basis for determining whether it is necessary to perform the two-step goodwill impairment analysis. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the two-step goodwill impairment test will be performed. The first step compares the carrying value of the reporting unit to its fair value using a discounted cash flow analysis. If the reporting unit’s carrying value exceeds its fair value, the Company would record an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value. There was no impairment of goodwill during the three and six months ended June 30, 2016 and 2015.

Revenue Recognition

The Company generates most of its revenue from global sales of the Omnipod System. Revenue also includes sales of devices based on the Omnipod technology platform to global pharmaceutical and biotechnology companies for the delivery of subcutaneous drugs across multiple therapeutic areas.

Revenue recognition requires that persuasive evidence of a sales arrangement exists, delivery of goods occurs through transfer of title and risk and rewards of ownership, the selling price is fixed or determinable and collectability is reasonably assured. With respect to these criteria:

• The evidence of an arrangement generally consists of a physician order form, a patient information form and, if applicable, third-party insurance approval for sales directly to patients or a purchase order for sales to a third-party distributor.

• Transfer of title and risk and rewards of ownership are passed to the patient or third-party distributor upon shipment of the products.

• The selling prices for all sales are fixed and agreed with the patient or third-party distributor and, if applicable, the patient’s third-party insurance provider(s) prior to shipment and are based on established list prices or, in the case of certain third-party insurers, contractually agreed upon prices. Provisions for discounts, rebates and other adjustments to customers are established as a reduction to revenue in the same period the related sales are recorded.

The Company offers a 45-day right of return for sales of its Omnipod System in the United States, and a 90-day right of return for sales of its Omnipod System in Canada to patients and defers revenue to reflect estimated sales returns in the same period that the related product sales are recorded. Returns are estimated through a comparison of the Company’s historical return data to its related sales. Historical rates of return are adjusted for known or expected changes in the marketplace. When doubt exists about reasonable assuredness of collectability from specific customers, the Company defers revenue from sales of products to those customers until payment is received.

As of June 30, 2016 and December 31, 2015, the Company had deferred revenue of $1.7 million and $2.5 million, respectively, which included $0.4 million and $0.2 million classified in other long-term liabilities in each period as of June 30, 2016 and December 31, 2015, respectively. Deferred revenue primarily relates to undelivered elements on certain arrangements within the Company's developmental arrangements and other instances where the Company has not yet met the revenue recognition criteria.

Shipping and Handling Costs

The Company does not typically charge its customers for shipping and handling costs associated with shipping its product to its customers. These shipping and handling costs are included in general and administrative expenses and were $0.7 million and $0.6 million for the three months ended June 30, 2016 and 2015, respectively and were $1.7 million and $1.0 million for the six months ended June 30, 2016 and 2015.

Concentration of Credit Risk

Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents and accounts receivable. The Company maintains the majority of its cash with two financial institutions.

The Company purchases Omnipods from Flextronics International Ltd., its single source supplier. As of June 30, 2016 and December 31, 2015, liabilities to this vendor represented approximately 34% and 28% of the combined balance of accounts payable, accrued expenses and other current liabilities, respectively.

Revenue for customers comprising more than 10% of total revenue were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
Amgen, Inc.	16%	12%	17%	11%
Ypsomed Distribution AG	15%	10%	15%	*
RGH Enterprises, Inc.	11%	14%	11%	13%

^{* Customer represents less than 10% of revenue for the period.} 

Reclassification of Prior Period Balance

Certain reclassifications have been made to prior periods amounts to conform to the current period financial statement presentation including adjusting footnotes within to reflect the presentation of discontinued operations. These reclassifications have no effect on previously reported net loss.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 requires that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Under this guidance, a company makes additional estimates regarding performance conditions and the allocation of variable consideration. The guidance is effective in fiscal years beginning January 1, 2018, with early adoption permitted. The Company is currently evaluating the impact of ASU 2014-09. The Company has not yet selected a transition method nor has it determined the effect of the standard on its consolidated financial position and results of operations.

In June 2014, the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments when the terms of an award provide that a performance target could be achieved after the requisite service period ("ASU 2014-12"). ASU 2014-12 clarifies the period over which compensation cost would be recognized in awards with a performance target that affects vesting and that could be achieved after the requisite service period. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective in fiscal years beginning after January 1, 2016, with early adoption permitted. The Company has adopted ASU 2014-12 on January 1, 2016 and its adoption did not have an impact on the consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements- Going Concern ("ASU 2014-15"). ASU No. 2014-15 requires management to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.  The new standard is effective for fiscal years ending after December 15, 2016 and interim periods within annual periods beginning after 15 December 2016.  Early adoption is permitted. The Company concluded, that if this standard had been adopted as of June 30, 2016 substantial doubt about the Company’s ability to continue as a going concern would not exist.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 amends existing guidance and requires entities to measure most inventory at the lower of cost and net realizable value. The guidance is effective prospectively for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. Upon adoption, entities must disclose the nature of and reason for the accounting change. The Company is currently evaluating the impact of ASU 2015-11.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations,Simplifying the Accounting for Measurement Period Adjustments ("ASU 2015-16"). ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date. The guidance is effective in 2016 for calendar year-end public entities. Early adoption is permitted. The Company has adopted ASU 2015-16 on January 1, 2016 and its adoption did not have an impact on the consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update 2016-01 ("ASU 2016-01"), Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 changes the current GAAP model for the accounting of equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. All equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value through earnings. There will no longer be an available-for-sale classification (changes in fair value reported in other comprehensive income (loss)) for equity securities with readily determinable fair values. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The classification and measurement guidance will be effective in fiscal years beginning after December 15, 2017, and interim periods within those years. The Company is currently evaluating the impact of ASU 2016-01.

In February 2016, the FASB issued ASU No. 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize the assets and liabilities on their balance sheet for the rights and obligations created by most leases and continue to recognize expenses on their income statements over the lease term.  It will also require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-02.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those years. Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-09.

Other Significant Policies:

The following table identifies the Company's other significant accounting policies and the note and page where a detailed description of each policy can be found.

Fair Value Measurements	Note	4	Page
Accounts Receivable and Allowance for Doubtful Accounts	Note	9	Page
Inventories	Note	10	Page
Other Intangible Assets	Note	11	Page
Product Warranty Costs	Note	12	Page
Equity- Stock-Based Compensation	Note	14	Page
Income Taxes	Note	15	Page
Segment Reporting	Note	16	Page

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Discontinued Operations

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

Beginning in the first quarter of 2016, the results of operations, assets, and liabilities of Neighborhood Diabetes, are classified as discontinued operations for all periods presented, except for certain corporate overhead costs which remain in continuing operations.

In February 2016, the Company sold Neighborhood Diabetes to Liberty Medical LLC (Liberty Medical) for approximately $6.2 million in cash, which included $1.2 million of closing adjustments finalized in June 2016 and paid by Liberty Medical.

In connection with the 2016 disposition, the Company entered into a transition services agreement pursuant to which Insulet is providing various services to Liberty Medical on an interim transitional basis. The services generally commenced on the separation date and terminate six months following the closing. Services provided by Insulet include certain information technology and back office support. The charges for such services are generally intended to allow the service provider to recover all out-of-pocket costs. Billings by Insulet under the transition services agreement are recorded as a reduction of the costs to provide the respective service in the applicable expense category in the consolidated statements of operations. This transitional support is to provide Liberty Medical the time required to establish its stand-alone processes for such activities that were previously provided by Insulet as described above and does not constitute significant continuing support of Liberty Medical's operations. Total expenses incurred for such transition services, which will be reimbursed in full, were $0.4 million and $0.7 million for the three and six months ended June 30, 2016.

Following the disposition, the Company entered into a distribution agreement with the Neighborhood Diabetes subsidiary of Liberty Medical to continue to act as a distributor for the Company's products. For the three months ended June 30, 2016 and 2015, revenue from continued operations as presented in the consolidated statement of operations include $0 and $0.7 million, respectively of Omnipod sales transacted through Neighborhood Diabetes prior to the divestiture that were previously eliminated in consolidation and were $0.3 million and $1.2 million for the six months ended June 30, 2016 and 2015, respectively. These amounts were historically reported in the Neighborhood Diabetes revenue results and are being presented based on current market terms of products sold to the Neighborhood Diabetes subsidiary of Liberty Medical.

Post divestiture, Omnipod sales to the Neighborhood Diabetes subsidiary of Liberty Medical were $0.1 million and $0.4 million for the three and six months ended June 30, 2016, respectively.

The following is a summary of the operating results of Neighborhood Diabetes included in discontinued operations for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2016			2015		2016			2015
Discontinued operations:
Revenue (1)	$	—		$	15,037	$	7,730		$	28,104
Cost of revenue	—			11,177		5,369			20,630
Gross profit	—			3,860		2,361			7,474
Operating and other (income) expenses	(153		)	2,003		2,328			6,981
Loss on sale of Neighborhood Diabetes	—			—		1,264			—
Income (loss) from discontinued operations before taxes	153			1,857		(1,231		)	493
Income tax expense	—			22		408			50
Net income (loss) from discontinued operations(2)	$	153		$	1,835	$	(1,639	)	$	443

⁽¹⁾  Revenue for the three and six months ending June 30, 2016 includes revenue from the operations of Neighborhood Diabetes through date of sale in February 2016.

⁽²⁾  Income from discontinued operations for the three and six months ended June 30, 2015 resulted from a $2.7 million reduction in a previously recorded liability associated with sales and use tax audits based on final settlement in the second quarter of 2015.

The following is a summary of the Neighborhood Diabetes assets and liabilities presented as discontinued operations as of December 31, 2015:

	December 31, 2015
(In thousands)
ASSETS
Accounts receivable, net	$	5,857
Inventories, net	2,019
Prepaid expenses and other current assets	1,376
Current assets of discontinued operations	9,252
Intangible assets, net	1,788
Goodwill	140
Other non-current assets	28
Long-term assets of discontinued operations	1,956
Total assets of discontinued operations	$	11,208
LIABILITIES
Accounts payable	$	3,436
Accrued expenses and other current liabilities	1,883
Current liabilities of discontinued operations	5,319
Total liabilities of discontinued operations	$	5,319

Net operating cash flows provided by discontinued operations in the three months ended June 30, 2016 and 2015, were $0 and $0.5 million, respectively. Net operating cash flows used in discontinued operations in the six months ended June 30, 2016 and 2015 were $2.0 million and $0.9 million, respectively.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company adopted the FASB Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”) related to the fair value measurement of certain of its assets and liabilities. ASC 820 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. When estimating fair value, depending on the nature and complexity of the asset or liability, the Company may use one or all of the following approaches:

• Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.

• Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance for functional and/or economic obsolescence.

• Income approach, which is based on the present value of the future stream of net cash flows.

To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, as described in ASC 820, of which the first two are considered observable and the last unobservable:

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 in which there is little or no market data available, which require the reporting entity to develop its own assumptions

Certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other liabilities are carried at cost, which approximates their fair value because of the short-term maturity of these financial instruments.

The following table provides a summary of assets that are measured at fair value as of June 30, 2016, and December 31, 2015, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
June 30, 2016
Recurring fair value measurements:
Cash equivalents:
Money market mutual funds	$	41,297	$	41,297	$	—	$	—
Corporate bonds	5,574		—		5,574		—
U.S. government and agency bonds	4,998		—		4,998		—
Certificates of deposit	2,205		2,205		—		—
Total cash equivalents	$	54,074	$	43,502	$	10,572	$	—
Short-term investments:
U.S. government and agency bonds	$	13,784	$	10,022	$	3,762	$	—
Corporate bonds	11,824		—		11,824		—
Certificates of deposit	9,997		9,997		—		—
Total short-term investments	$	35,605	$	20,019	$	15,586	$	—
December 31, 2015
Recurring fair value measurements:
Cash equivalents:
Money market mutual funds	$	98,223	$	98,223	$	—	$	—
Non-recurring fair value measurements:
Long-lived assets held and used(1)	$	1,788	$	—	$	—	$	1,788

⁽¹⁾  Long-lived assets held and used relate to the asset group of the Neighborhood Diabetes business which consists of definite lived intangible assets and property and equipment. During the fourth quarter of 2015, the Company recognized an impairment charge on this asset group totaling $9.1 million, which represented the difference between the fair value of the asset group and the carrying value. As a result of the impairment, the asset group was recorded at fair value as of December 31, 2015. The fair value for the asset group was determined using the direct cash flows expected to be received from the disposition of the asset group, which was completed in February 2016 (level 3 input).    

Debt

The estimated fair value of debt is based on the Level 2 quoted market prices for the same or similar issues and included the impact of the conversion features.

The carrying amounts and the estimated fair values of financial instruments as of June 30, 2016, and December 31, 2015, are as follows (in thousands):

	June 30, 2016				December 31, 2015
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
2% Convertible senior notes	$	175,690	$	191,391	$	171,698	$	207,882

The Company issued $201.3 million in principal amount of 2% Notes (as defined below) in June 2014. The carrying value of the 2% Notes at June 30, 2016 includes a debt discount of $22.3 million which is being amortized as non-cash interest expense over the term of the 2% Notes. The decrease in the estimated fair values of these liabilities from December 31, 2015 to June 30, 2016 represents the impact of the quoted bond prices at those dates.

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Short-term Investments

6 Months Ended

Jun. 30, 2016

Short-term Investments [Abstract]

Short-term Investments

Short-term Investments

The Company's short-term investments are classified as available-for-sale and amortized costs, gross unrealized holding gains and losses, and fair values at June 30, 2016 are as follows (in thousands) and the Company did not have any short-term investments at December 31, 2015:

	Amortized cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2016
U.S. government and agency bonds	$	13,777	$	7	$	—		$	13,784
Corporate bonds	11,823		2		(1		)	11,824
Certificates of deposit	9,997		—		—			9,997
Total short-term investments	$	35,597	$	9	$	(1	)	$	35,605

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Debt

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt

Debt

The Company had outstanding convertible debt and related deferred financing costs on its consolidated balance sheet as follows (in thousands):

	June 30, 2016			December 31, 2015
Principal amount of the 2% Convertible Senior Notes	$	201,250		$	201,250
Unamortized debt discount	(22,275		)	(25,704		)
Deferred financing costs	(3,285		)	(3,848		)
Long-term debt, net of discount	$	175,690		$	171,698

Interest expense related to the 2% Notes was included in interest and other expense on the consolidated statements of operations as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Contractual coupon interest	$	1,007	$	1,006	$	2,013	$	2,012
Accretion of debt discount	1,727		1,625		3,429		3,226
Amortization of debt issuance costs	281		281		563		563
Total interest and other expense	$	3,015	$	2,912	$	6,005	$	5,801

3.75% Convertible Senior Notes

In June 2011, the Company sold $143.8 million in principal amount of 3.75% Convertible Senior Notes due June 15, 2016 (the "3.75% Notes"). The interest rate on the notes was 3.75% per annum, payable semi-annually in arrears in cash on December 15 and June 15 of each year. The 3.75% Notes were convertible into the Company’s common stock at an initial conversion rate of 38.1749 shares of common stock per $1,000 principal amount of the 3.75% Notes, which was equivalent to a conversion price of approximately $26.20 per share.

In connection with the issuance of the 3.75% Notes, the Company repurchased $70 million in principal amount of its 5.375% Convertible Senior Notes due June 15, 2013 (the "5.375% Notes") for $85.1 million, a 21.5% premium on the principal amount. The investors that held the $70 million in principal amount of repurchased 5.375% Notes purchased $59.5 million in principal amount of the 3.75% Notes and retained approximately $13.5 million in principal amount of the remaining 5.375% Notes. These investors’ combined $73.0 million in principal amount of convertible debt ($13.5 million of 5.375% Notes and $59.5 million of 3.75% Notes) was considered to be a modification of a portion of the 5.375% Notes and was accounted for separately from the issuance of the remainder of the 3.75% Notes.

The Company recorded a total debt discount of $25.8 million related to the modified debt. This discount consisted of $10.5 million related to the remaining debt discount on the $70 million in principal amount of 5.375% Notes repurchased, $15.1 million related to the premium payment in connection with the repurchase and $0.2 million related to the increase in the value of the conversion feature. The total debt discount was being amortized as non-cash interest expense at the effective rate of 16.5% over the five year term of the modified debt. Additionally, the Company paid transaction fees of approximately $2.0 million related to the modification, which were recorded as interest and other expense at the time of the modification.

Of the $143.8 million in principal amount of 3.75% Notes issued in June 2011, $84.3 million in principal amount was considered to be an issuance of new debt. The Company recorded a debt discount of $26.6 million related to the $84.3 million in principal amount of 3.75% Notes. The debt discount was recorded as additional paid-in capital to reflect the value of its nonconvertible debt borrowing rate of 12.4% per annum and was being amortized as non-cash interest expense over the five year term of the 3.75% Notes. The Company incurred deferred financing costs related to this offering of approximately $2.8 million, of which $0.9 million has been reclassified as an offset to the value of the amount allocated to equity. The remainder was recorded as other assets in the consolidated balance sheet and was being amortized as non-cash interest expense over the five year term of the 3.75% Notes.

In June 2014, in connection with the issuance of $201.3 million in principal amount of 2% Convertible Senior Notes due June 15, 2019 (the “2% Notes”), the Company repurchased approximately $114.9 million in principal amount of the 3.75% Notes for $160.7 million, a premium of $45.8 million over the principal amount. Investors that held approximately $80.0 million of 3.75% Notes purchased approximately $98.2 million in principal amount of the 2% Notes. The repurchase of the 3.75% Notes was treated as an extinguishment of debt since the fair value of the conversion feature changed by more than 10%. The extinguishment of the 3.75% Notes was accounted for separately from the issuance of the 2% Notes. The $160.7 million paid to extinguish the debt was allocated to debt and equity based on their respective fair values immediately prior to the transaction. The Company allocated $112.4 million of the payment to the debt and $48.3 million to equity.

The 3.75% Notes were convertible at the option of the holder during the quarter ended June 30, 2014 since the last reported sales price per share of the Company's common stock was equal to or greater than 130% of the conversion price for at least 20 of the 30 trading days ended on March 31, 2014. The 3.75% Notes and any unpaid interest were convertible at the Company’s option for cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock.

Beginning on June 20, 2014, the Company had the right to redeem the 3.75% Notes, at its option, in whole or in part, if the last reported sale price per share of the Company’s common stock was at least 130% of the conversion price then in effect for at least 20 trading days during a period of 30 consecutive trading days. In June 2014, the Company met the redemption requirements and notified holders of its intent to redeem the outstanding $28.8 million in principal amount of 3.75% Notes in July 2014. Prior to the redemption date, holders of $28.5 million in principal amount of 3.75% Notes exercised their right to convert their outstanding 3.75% Notes. The Company settled this conversion of the 3.75% Notes in July 2014 by providing cash of $28.5 million for the principal amount of the outstanding 3.75% Notes converted and issuing 348,535 shares of common stock for the conversion premium totaling $12.6 million, for a total consideration paid of $41.1 million. The Company settled the redemption of the remaining $0.3 million in principal amount in exchange for a cash payment of $0.3 million representing principal and accrued and unpaid interest. The Company allocated $27.9 million of the total consideration paid to the debt and $13.5 million to equity.

The Company recorded a loss on extinguishment of debt of $23.2 million in connection with the repurchase and redemption of the 3.75% Notes during the year ended December 31, 2014, representing the excess of the $140.3 million allocated to the debt over its carrying value, net of deferred financing costs.

Certain features related to a portion of the 3.75% Notes, including the holders’ ability to require the Company to repurchase their notes and the higher interest payments required in an event of default, were considered embedded derivatives and were required to be bifurcated and accounted for at fair value. The Company assessed the value of these embedded derivatives at each balance sheet date.

There was no cash or non-cash interest expense recorded in the six months ended June 30, 2016 and 2015 related to the 3.75% Notes.

As of December 31, 2014, no amounts remain outstanding related to the 3.75% Notes.

2% Convertible Senior Notes

In June 2014, the Company sold $201.3 million in principal amount of the 2% Notes due June 15, 2019. The interest rate on the notes is 2% per annum, payable semi-annually in arrears in cash on June 15 and December 15 of each year. The 2% Notes are convertible into the Company’s common stock at an initial conversion rate of 21.5019 shares of common stock per $1,000 principal amount of the 2% Notes, which is equivalent to a conversion price of approximately $46.51 per share, subject to adjustment under certain circumstances.

The Company recorded a debt discount of $35.6 million related to the 2% Notes. The debt discount was recorded as additional paid-in capital to reflect the value of the Company’s nonconvertible debt borrowing rate of 6.2% per annum. This debt discount is being amortized as non-cash interest expense over the five year term of the 2% Notes. The Company incurred deferred financing costs related to this offering of approximately $6.7 million, of which $1.2 million has been reclassified as an offset to the value of the amount allocated to equity. The remainder is recorded as a reduction to debt in the consolidated balance sheet and is being amortized as non-cash interest expense over the five year term of the 2% Notes.

The 2% Notes contain provisions that allow for additional interest to the holders of the Notes upon the failure to timely file documents or reports that the Company is required to file with the SEC. The additional interest is at a rate of 0.25% per annum of the principal amount of the notes outstanding for the first 180 days and 0.50% per annum of the principal amount of the notes outstanding for a period up to 360 days.

If the Company is purchased by a company outside of the U.S., then additional taxes may be required to be paid by the Company under the terms of the 2% Notes.

The Company determined that the higher interest and tax payments required in certain circumstances are considered embedded derivatives and should be bifurcated and accounted for at fair value. The Company assesses the value of the embedded derivatives at each balance sheet date. The derivatives had de minimis value at the balance sheet date.

Cash interest expense related to the 2% Notes was $1.0 million in both the three months ended June 30, 2016 and 2015. Cash interest expense related to the 2% Notes was $2.0 million in both the six months ended June 30, 2016 and 2015.

Non-cash interest expense related to the 2% Notes was $2.0 million and $1.9 million in the three months ended June 30, 2016 and 2015, respectively. Non-cash interest expense related to the 2% Notes was $4.0 million and $3.8 million in the six months ended June 30, 2016 and 2015, respectively.

As of June 30, 2016, the Company included $175.7 million on its balance sheet in long-term debt related to the 2% Notes.

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Capital Lease Obligations

6 Months Ended

Jun. 30, 2016

Leases, Capital [Abstract]

Capital Lease Obligations

Capital Lease Obligations

As of June 30, 2016, and December 31, 2015, the Company has approximately $13.7 million of manufacturing equipment acquired under capital leases, included in property and equipment. The obligations under the capital leases are being repaid in equal monthly installments over 24 to 36 month terms and include principal and interest payments with an effective interest rate of 13% to 17%.

The assets acquired under capital leases are being amortized on a straight-line basis over five years in accordance with the Company's policy for depreciation of manufacturing equipment. Amortization expense on assets acquired under capital leases is included with depreciation expense. Amortization expense related to these capital leased assets was $0.7 million and $0.6 million in the three months ended June 30, 2016 and 2015, respectively. Amortization expense was $1.4 million and $1.1 million in the six months ended June 30, 2016 and 2015, respectively.

Assets held under capital leases consist of the following (in thousands):

	June 30, 2016			December 31, 2015
Manufacturing equipment	$	13,705		$	13,705
Less: Accumulated amortization	(5,715		)	(4,346		)
Total	$	7,990		$	9,359

The aggregate future minimum lease payments related to these capital leases as of June 30, 2016, are as follows (in thousands):

Years Ending December 31,	Minimum Lease Payments
2016 (remaining)	$	2,116
2017	269
Total future minimum lease payments	$	2,385
Interest expense	70
Total capital lease obligations	$	2,315

The Company recorded $0.1 million and $0.4 million of interest expense on capital leases in the three months ended June 30, 2016 and 2015, respectively. The Company recorded $0.3 million and $0.7 million of interest expense on capital leases in the six months ended June 30, 2016 and 2015, respectively.

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Net Loss Per Share

6 Months Ended

Jun. 30, 2016

Disclosure Potential Common Shares Excluded From Computation Of Diluted Net Loss Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period, excluding unvested restricted common shares. Diluted net loss per share is computed using the weighted average number of common shares outstanding and, when dilutive, potential common share equivalents from options, restricted stock units and warrants (using the treasury-stock method), and potential common shares from convertible securities (using the if-converted method). Because the Company reported a net loss for the three and six months ended June 30, 2016 and 2015, all potential dilutive common shares have been excluded from the computation of the diluted net loss per share for all periods presented, as the effect would have been anti-dilutive.

Potential dilutive common share equivalents consist of the following:

	Three and Six Months Ended June 30,
	2016	2015
2.00% Convertible Senior Notes	4,327,257	4,327,257
Unvested restricted stock units	999,186	948,554
Outstanding options	3,592,064	2,879,370
Total dilutive common shares	8,918,507	8,155,181

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Accounts Receivable and Allowance for Doubtful Accounts

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist of amounts due from third-party payors, patients, third-party distributors and government agencies. The Company records an allowance for doubtful accounts at the time potential collection risk is identified. The Company estimates its allowance based on historical experience, assessment of specific risk, discussions with individual customers or various assumptions and estimates that are believed to be reasonable under the circumstances. The Company believes the reserve is adequate to mitigate current collection risk.

Customers that represented greater than 10% of accounts receivable as of June 30, 2016 and December 31, 2015 were as follows:

	June 30, 2016		December 31, 2015
Amgen, Inc.	21	%	22	%
Ypsomed Distribution AG	17	%	19	%

The components of accounts receivable are as follows (in thousands):

	June 30, 2016			December 31, 2015
Trade receivables	$	42,351		$	46,668
Allowance for doubtful accounts	(3,651		)	(4,138		)
Total accounts receivable	$	38,700		$	42,530

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Inventories

6 Months Ended

Jun. 30, 2016

Disclosure Components Of Inventories [Abstract]

Inventories

Inventories

Inventories are held at the lower of cost or market, determined under the first-in, first-out method, and include the costs of material, labor and overhead. Inventory has been recorded at cost as of June 30, 2016 and December 31, 2015. Work in process is calculated based upon a buildup in the stage of completion using estimated labor inputs for each stage in production. The Company reviews inventories for net realizable value based on quantities on hand and expectations of future use.

The components of inventories are as follows (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	1,262	$	632
Work-in-process	3,522		1,960
Finished goods, net	19,702		9,432
Total inventories	$	24,486	$	12,024

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Other Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Other Intangible Assets

Other Intangible Assets

The Company’s finite-lived intangible assets are stated at cost less accumulated amortization. The Company assesses its intangible and other long-lived assets for impairment whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable. The Company recognizes an impairment loss for intangibles and other finite-lived assets if the carrying amount of a long-lived asset is not recoverable based on its undiscounted future cash flows. Any such impairment loss is measured as the difference between the carrying amount and the fair value of the asset. The estimation of useful lives and expected cash flows requires the Company to make significant judgments regarding future periods that are subject to some factors outside its control. Changes in these estimates can result in significant revisions to the carrying value of these assets and may result in material charges to the results of operations.

The Company recorded $32.9 million of other intangible assets as a result of the acquisition of Neighborhood Diabetes in 2011. In December 2015, the Company completed a long-lived asset impairment test for Neighborhood Diabetes and determined that the carrying value of the long-lived asset group, which included intangible assets, exceeded the undiscounted cash flows expected to be generated from the asset group. The Company compared the fair value of the intangible assets and the related asset group, which was estimated based on the subsequent sales price of the asset group as of February 2016. As a result, an impairment charge of $9.0 million was recorded within general and administrative expenses for the year ended December 31, 2015. The impairment charge was allocated on a pro-rata basis based on the carrying value of the assets within the asset group. As a result, impairment charges of approximately $7.4 million and $1.6 million, respectively, were recorded on the customer relationship and trade name intangible assets. During the three months ended March 31, 2016, the remaining balance of the other intangible assets associated with the acquisition of Neighborhood Diabetes were removed from the balance sheet as part of the divestiture and included in the calculated loss of disposal. No further impairment was recorded upon the sale.

The Company recorded $2.1 million of other intangible assets in 2015 as a result of the July 2015 acquisition of its Canadian distribution business. The Company determined that the estimated useful life of the contractual relationship asset is 5 years and is amortizing the asset based on the expected cash flows of the assets.

The components of other intangible assets are as follows (in thousands):

	June 30, 2016							December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Contractual relationships, net	$	2,067	$	(1,294	)	$	773	$	1,933	$	(1,000	)	$	933
Tradename	—		—			—		—		—			—
Total intangible assets	$	2,067	$	(1,294	)	$	773	$	1,933	$	(1,000	)	$	933

Amortization expense for intangible assets, excluding discontinued operations, was approximately $0.1 million and $0.2 million for the three and six months ended June 30, 2016, respectively. There was no amortization expense, excluding discontinued operations, for the three and six months ended June 30, 2015. Amortization expense is recorded in general and administrative expenses in the consolidated statements of operations.

Amortization expense expected for the next five years and thereafter is as follows (in thousands):

Years Ending December 31,	Contractual Relationships
2016 (remaining)	$	226
2017	187
2018	160
2019	133
2020	67
Thereafter	—
Total	$	773

As of June 30, 2016, the weighted average amortization period of the Company’s intangible assets is approximately 4.5 years.

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Accrued Expenses and Other Current Liabilities

6 Months Ended

Jun. 30, 2016

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

The components of accrued expenses and other current liabilities are as follows (in thousands):

	June 30, 2016		December 31, 2015
Employee compensation and related items	$	14,572	$	16,856
Professional and consulting services	4,064		5,654
Suppliers	2,813		4,981
Other	8,489		9,253
Total accrued expenses and other current liabilities	$	29,938	$	36,744

Product Warranty Costs

The Company provides a four-year warranty on its PDMs sold in the United States and a five year warranty on its PDMs sold in Canada and may replace any Omnipods 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. Warranty expense is recorded in cost of goods sold on the statement of operations. As these estimates are based on historical experience, and the Company continues to introduce new products and versions, the Company also considers the anticipated performance of the product over its warranty period in estimating warranty reserves.

A reconciliation of the changes in the Company’s product warranty liability is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Balance at the beginning of the period	$	4,160		$	2,661		$	4,152		$	2,614
Warranty expense	1,112			1,254			2,139			1,721
Warranty claims settled	(978		)	(748		)	(1,997		)	(1,168		)
Balance at the end of the period	$	4,294		$	3,167		$	4,294		$	3,167

The composition of the product warranty liability balance is reported on the Consolidated Balance Sheets as follows (in thousands):

	June 30, 2016		December 31, 2015
Composition of balance:
Short-term	$	1,583	$	1,592
Long-term	2,711		2,560
	$	4,294	$	4,152

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operating Leases

The Company leases its facilities in Massachusetts, Canada and Singapore. The Company’s leases are accounted for as operating leases. The leases generally provide for a base rent plus real estate taxes and certain operating expenses related to the leases.

Certain of the Company’s operating lease agreements contain scheduled rent increases. Rent expense is recorded using the straight-line method and deferred rent is included in other current and long-term liabilities in the accompanying balance sheets. The Company has considered FASB ASC 840-20, Leases in accounting for these lease provisions.

The aggregate future minimum lease payments related to these leases as of June 30, 2016, are as follows (in thousands):

Years Ending December 31,	Minimum Lease Payments
2016 (remaining)	$	1,089
2017	2,181
2018	2,162
2019	2,169
2020	2,146
Thereafter	3,934
Total	$	13,681

Legal Proceedings

The Company is in the process of responding to a revised audit report received in December 2015 on behalf of the Centers for Medicare and Medicaid Services and the State of New York alleging overpayment of certain Medicaid claims to Neighborhood Diabetes.  As of December 31, 2015, the Company had determined that it was probable that a loss had been incurred and recorded an aggregate liability of $0.4 million through general and administrative expense as of that date which remains accrued as of June 30, 2016.

In May 2016, the Company reached a settlement agreement for $0.5 million with the Connecticut Department of Social Services Office of Quality Assurance relating to an audit alleging overpayment of certain Medicaid claims to Neighborhood Diabetes. The settlement amount for this audit was consistent with the amount previously accrued.

In April 2016, the Company reached a settlement agreement for $0.5 million with the Massachusetts Department of Revenue for sales and use tax audits related to Insulet Corporation, which resulted in a $0.2 million reduction of the previously recorded liability and a credit to general and administrative expenses during the three months ending March 31, 2016.

Between May 5, 2015 and June 16, 2015, three class action lawsuits were filed by shareholders in the U.S. District Court, Massachusetts, against the Company and certain individual current and former executives of the Company. Two suits subsequently were voluntarily dismissed. Arkansas Teacher Retirement System v. Insulet, et al., 1:15-cv-12345, which remains outstanding, alleges 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. The lawsuit seeks, among other things, compensatory damages in connection with the Company’s allegedly inflated stock price between May 7, 2013 and April 30, 2015, as well as attorneys’ fees and costs. Due in part to the preliminary nature of this matter, the Company currently cannot reasonably estimate a possible loss, or range of loss, in connection with this matter.

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.

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Equity

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity

Equity

The Company accounts for stock-based compensation under the provisions of FASB ASC 718-10, Compensation — Stock Compensation (“ASC 718-10”), which requires all share-based payments to employees, including grants of employee stock options and restricted stock units, to be recognized in the income statement based on their fair values. Share-based payments that contain performance conditions are recognized when such conditions are probable of being achieved.

The Company uses the Black-Scholes option pricing model to determine the weighted-average fair value of options granted. The Company determines the intrinsic value of restricted stock units based on the closing price of its common stock on the date of grant. The Company recognizes the compensation expense of share-based awards on a straight-line basis for awards with only service conditions and on an accelerated method for awards with performance conditions. Compensation expense is recognized over the vesting period of the awards.

The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the stock price and the following assumptions, including expected volatility, expected life of the awards, the risk-free interest rate, and the dividend yield. The expected volatility is computed over expected terms based upon the historical volatility of the Company's stock. The expected life of the awards is estimated based on the midpoint scenario, which combines historical exercise data with hypothetical exercise data for outstanding options. The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of the awards. The dividend yield assumption is based on Company history and expectation of paying no dividends. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense recognized in the financial statements is based on awards that are ultimately expected to vest. The Company evaluates the assumptions used to value the awards on a quarterly basis and if factors change and different assumptions are utilized, stock-based compensation expense may differ significantly from what has been recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.

Stock-based compensation expense related to share-based awards recognized in the three months ended June 30, 2016 and 2015 was $5.5 million and $4.3 million, respectively, based upon when the awards are ultimately expected to vest. Stock-based compensation expense related to the share-based awards recognized in the six months ended June 30, 2016 and 2015 was $10.8 million and $9.6 million, respectively, and was also calculated based on when the awards are ultimately expected to vest.

At June 30, 2016, the Company had $48.9 million of total unrecognized compensation expense related to unvested stock options and restricted stock units.

Stock Options

In May 2007, in conjunction with the Company's initial public offering, the Company adopted its 2007 Stock Option and Incentive Plan (the "2007 Plan"). The 2007 Plan was amended and restated in November 2008, May 2012 and May 2015 to provide for the issuance of additional shares and to amend certain other provisions. Under the 2007 Plan, awards may be granted to persons who are, at the time of grant, employees, officers, non-employee directors or key persons (including consultants and prospective employees) of the Company. The 2007 Plan provides for the granting of stock options, restricted stock units, stock appreciation rights, deferred stock awards, restricted stock, unrestricted stock, cash-based awards, performance share awards or dividend equivalent rights. Options granted under the 2007 Plan generally vest over a period of four years and expire ten years from the date of grant. As of June 30, 2016, 4,515,161 shares remain available for future issuance under the 2007 Plan.

The Company awarded 194,500 shares of performance-based incentive stock options in 2015. The stock options were granted under the 2007 Plan and vest over a four year period from the grant date with the potential of an accelerated vesting period pursuant to the achievement of certain performance conditions. Performance awards are amortized over the service period using an accelerated attribution method.

The following summarizes the activity under the Company’s stock option plans in the six months ended June 30, 2016:

	Number of Options (#)		Weighted Average Exercise Price ($)		Aggregate Intrinsic Value ($)
					(In thousands)
Balance, December 31, 2015	2,999,199		$	31.37
Granted	791,652		30.09
Exercised(1)	(64,851	)	16.73		$	997
Canceled	(133,936	)	32.39
Balance, June 30, 2016	3,592,064		$	31.32	$	6,690
Vested, June 30, 2016(2)	1,345,758		$	30.17	$	5,275
Vested and expected to vest, June 30, 2016(2)(3)	3,258,999				$	6,470

⁽¹⁾  The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of the date of exercise and the exercise price of the underlying options.

⁽²⁾  The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of June 30, 2016, and the exercise price of the underlying options.

⁽³⁾  Represents the number of vested options as of June 30, 2016, plus the number of unvested options expected to vest as of June 30, 2016, based on the unvested options outstanding at June 30, 2016, adjusted for the estimated forfeiture.

At June 30, 2016 there were 3,592,064 options outstanding with a weighted average exercise price of $31.32 and a weighted average remaining contractual life of 8.3 years. At June 30, 2016 there were 1,345,758 options exercisable with a weighted average exercise price of $30.17 and a weighted average remaining contractual life of 7.0 years.

Employee stock-based compensation expense related to stock options in the three months ended June 30, 2016 and 2015 was $2.5 million and $2.0 million, respectively, and was based on awards ultimately expected to vest. Employee stock-based compensation expense related to stock options in the six months ended June 30, 2016 and 2015 was $4.8 million and $5.0 million, respectively, and was based on awards ultimately expected to vest. At June 30, 2016, the Company had $23.1 million of total unrecognized compensation expense related to stock options that will be recognized over a weighted average vesting period of 1.4 years.

Restricted Stock Units

In the six months ended June 30, 2016, the Company awarded 561,801 restricted stock units to certain employees and non-employee members of the Board of Directors, which included 149,256 restricted stock units subject to the achievement of performance conditions (performance-based restricted stock units). The number of performance-based restricted stock units granted during the six months ended June 30, 2016 that are expected to vest may vary based on the Company's quarterly evaluation of the probability of the performance criteria being achieved. The Company recognized stock compensation expense of $0.5 million and $1.2 million in the three and six months ended June 30, 2016 for performance-based restricted stock units that are expected to vest based on its evaluation of the performance criteria at June 30, 2016. No stock compensation expense was recognized in the three and six months ended June 30, 2015 for performance-based restricted stock units. Performance awards are amortized over the service period using an accelerated attribution method. The restricted stock units were granted under the 2007 Plan and vest over a three year period from the grant date.

The restricted stock units granted during the six months ended June 30, 2016 have a weighted average fair value of $29.43 per share based on the closing price of the Company’s common stock on the date of grant and were valued at approximately $16.5 million on their grant date. The Company is recognizing the compensation expense over the vesting period. Approximately $2.4 million and $2.3 million in the three months ended June 30, 2016 and 2015 and $4.8 million and $4.6 million in the six months ended June 30, 2016 and 2015 of stock-based compensation expense related to the vesting of non-performance based restricted stock units was recognized using the straight line method. Approximately $25.8 million of the fair value of the restricted stock units remained unrecognized as of June 30, 2016 and will be recognized over a weighted average period of 1.1 years. Under the terms of the awards, the Company will issue shares of common stock on each of the vesting dates.

The following table summarizes the status of the Company’s restricted stock units in the six months ended June 30, 2016:

	Number of Shares (#)		Weighted Average Grant Date Fair Value ($)
Balance, December 31, 2015	811,965		$	32.30
Granted	561,801		29.43
Vested	(287,059	)	30.69
Forfeited	(87,521	)	33.65
Balance, June 30, 2016	999,186		$	31.05

Employee Stock Purchase Plan

As of June 30, 2016, the Company had no shares contingently issued under the Employee Stock Purchase Plan (“ESPP”). In the three and six month periods ended June 30, 2016 and 2015, the Company recorded less than $0.1 million of stock-based compensation expense related to the ESPP.

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect in the years in which the differences are expected to reverse. The Company reviews its deferred tax assets for recoverability considering historical profitability, projected future taxable income, and the expected timing of the reversals of existing temporary differences and tax planning strategies. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company follows the provisions of FASB ASC 740-10, Income Taxes (“ASC 740-10”) on accounting for uncertainty in income taxes recognized in its financial statements. ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In addition, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company recognizes estimated interest and penalties for uncertain tax positions in income tax expense.

The Company files federal, state and foreign tax returns. These returns are generally open to examination by the relevant tax authorities from three to four years from the date they are filed. The tax filings relating to the Company's federal and state tax returns are currently open to examination for tax years 2012 through 2014 and 2010 through 2014, respectively. In addition, the Company has generated tax losses since its inception in 2000. These years may be subject to examination if the losses are carried forward and utilized in future years.

At June 30, 2016 and December 31, 2015, the Company provided a valuation allowance for the full amount of its net deferred tax asset because it is not more likely than not that the future tax benefit will be realized.

Income tax expense, excluding the historical amounts related to discontinued operations, consists of the following (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2016			2015		2016			2015
Current	$	137		$	15	$	212		$	39
Deferred	(72		)	—		(83		)	—
Total	$	65		$	15	$	129		$	39

The Company has generated deferred tax liabilities related to its amortization of acquired goodwill for tax purposes because the goodwill is not amortized for financial reporting purposes. The tax amortization gives rise to a temporary difference and a tax liability, which will only reverse at the time of ultimate disposition or impairment of the underlying goodwill. Due to the uncertain timing of this reversal, the temporary difference cannot be considered as a source of future taxable income for purposes of determining a valuation allowance; therefore, the tax liability cannot be used to offset deferred tax assets.

The Company had no unrecognized tax benefits at June 30, 2016.

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Segment Reporting

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision-maker ("CODM") in deciding how to allocate resources to an individual segment and in assessing performance of the segment. The Company has concluded that their Chief Executive Officer is the CODM as he is the ultimate decision maker for key operating decisions, determining the allocation of resources and assessing the financial performance of the Company. These decisions, allocations and assessments are performed by the CODM using consolidated financial information. Consolidated financial information is utilized by the CODM as the Company’s current product offering primarily consists of the Omnipod System and drug delivery. The Company’s products are relatively consistent and manufacturing is centralized and consistent across product offerings. Based on these factors, key operating decisions and resource allocations are made by the CODM using consolidated financial data and as such the Company has concluded that they operate as one segment.

Worldwide revenue for the Company's products is categorized as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
U.S. Omnipod	$	56,337	$	45,402	$	107,050	$	85,097
International Omnipod	16,559		7,640		31,939		11,420
Drug Delivery	14,434		7,509		29,554		12,182
Total	$	87,330	$	60,551	$	168,543	$	108,699

Geographic information about revenue, based on the region of the customer's shipping location, is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
United States	$	70,771	$	52,911	$	136,604	$	97,279
All other	16,559		7,640		31,939		11,420
Total	$	87,330	$	60,551	$	168,543	$	108,699

Geographic information about long-lived assets, net, excluding goodwill and other intangible assets is as follows (in thousands):

	June 30, 2016		December 31, 2015
United States	$	14,558	$	13,018
China	26,486		28,638
Other	175		213
Total	$	41,219	$	41,869

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016, or for any other subsequent interim period.

The unaudited consolidated financial statements in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Use of Estimates in Preparation of Financial Statements

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with 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. The most significant estimates used in these financial statements include the valuation of stock-based compensation expense, acquired businesses, accounts receivable, inventories, goodwill, deferred revenue, equity instruments, the lives of property and equipment and intangible assets, as well as warranty and doubtful accounts allowance reserve calculations. Actual results may differ from those estimates.

Foreign Currency Transactions and Translations

Foreign Currency Translation

For foreign operations, asset and liability accounts are translated at exchange rates as of the balance sheet date; income and expenses are translated using weighted average exchange rates for the reporting period. Resulting translation adjustments are reported in accumulated other comprehensive loss, a separate component of stockholders' equity. Gains and losses arising from transactions and translation of period-end balances denominated in currencies other than the functional currency, primarily the Canadian dollar, are included in other income, net, and were not material in the three and six months ended June 30, 2016 and 2015.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and Cash Equivalents

For the purpose of the financial statement classification, the Company considers all highly-liquid investment instruments with original maturities of 90 days or less, when purchased, to be cash equivalents. Cash equivalents include money market mutual funds, corporate bonds, U.S. government and agency bonds and certificates of deposit which are carried at their fair value.

Investments

Investments

Investment securities consist of available-for-sale marketable securities and are carried at fair value with unrealized gains or losses included as a component of other comprehensive loss in shareholders' equity. Investments, exclusive of cash equivalents, with a stated maturity date of one year or less from the balance sheet date or that are expected to be used in current operations, are classified as short-term investments.

The Company reviews investments for other-than-temporary impairment when the fair value of an investment is less than its amortized cost. If an available-for-sale security is other than temporarily impaired, the loss is charged to either earnings or shareholders' equity depending on the Company's intent and ability to retain the security until the full cost basis can be recovered.

Property and Equipment

Property and Equipment

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the respective assets. Leasehold improvements are amortized over their useful life or the life of the lease, whichever is shorter. Assets acquired under capital leases are amortized in accordance with the respective class of owned assets and the amortization is included with depreciation expense. Maintenance and repair costs are expensed as incurred.

Goodwill

Goodwill

Goodwill represents the excess of the cost of acquired businesses over the fair value of identifiable net assets acquired. The Company follows the provisions of Financial Accounting Standards Board ("FASB") ASC 350-20, Intangibles - Goodwill and Other (“ASC 350-20”). The Company performs an assessment of its goodwill for impairment on at least an annual basis or whenever events or changes in circumstances indicate there might be impairment. The Company's annual impairment test date is October 1st.

As the Company operates in one segment, the Company has considered whether that segment contains multiple reporting units. The Company has concluded that there is a single reporting unit as the Company does not have segment managers and discrete financial information below consolidated results is not reviewed on a regular basis. Based on this conclusion, goodwill was tested for impairment at the enterprise level. The Company has the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of its sole reporting unit is less than its carrying amount. This qualitative analysis is used as a basis for determining whether it is necessary to perform the two-step goodwill impairment analysis. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the two-step goodwill impairment test will be performed. The first step compares the carrying value of the reporting unit to its fair value using a discounted cash flow analysis. If the reporting unit’s carrying value exceeds its fair value, the Company would record an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value.

Revenue Recognition

Revenue Recognition

The Company generates most of its revenue from global sales of the Omnipod System. Revenue also includes sales of devices based on the Omnipod technology platform to global pharmaceutical and biotechnology companies for the delivery of subcutaneous drugs across multiple therapeutic areas.

Revenue recognition requires that persuasive evidence of a sales arrangement exists, delivery of goods occurs through transfer of title and risk and rewards of ownership, the selling price is fixed or determinable and collectability is reasonably assured. With respect to these criteria:

• The evidence of an arrangement generally consists of a physician order form, a patient information form and, if applicable, third-party insurance approval for sales directly to patients or a purchase order for sales to a third-party distributor.

• Transfer of title and risk and rewards of ownership are passed to the patient or third-party distributor upon shipment of the products.

• The selling prices for all sales are fixed and agreed with the patient or third-party distributor and, if applicable, the patient’s third-party insurance provider(s) prior to shipment and are based on established list prices or, in the case of certain third-party insurers, contractually agreed upon prices. Provisions for discounts, rebates and other adjustments to customers are established as a reduction to revenue in the same period the related sales are recorded.

The Company offers a 45-day right of return for sales of its Omnipod System in the United States, and a 90-day right of return for sales of its Omnipod System in Canada to patients and defers revenue to reflect estimated sales returns in the same period that the related product sales are recorded. Returns are estimated through a comparison of the Company’s historical return data to its related sales. Historical rates of return are adjusted for known or expected changes in the marketplace. When doubt exists about reasonable assuredness of collectability from specific customers, the Company defers revenue from sales of products to those customers until payment is received.

As of June 30, 2016 and December 31, 2015, the Company had deferred revenue of $1.7 million and $2.5 million, respectively, which included $0.4 million and $0.2 million classified in other long-term liabilities in each period as of June 30, 2016 and December 31, 2015, respectively. Deferred revenue primarily relates to undelivered elements on certain arrangements within the Company's developmental arrangements and other instances where the Company has not yet met the revenue recognition criteria.

Shipping and Handling Costs

Shipping and Handling Costs

The Company does not typically charge its customers for shipping and handling costs associated with shipping its product to its customers. These shipping and handling costs are included in general and administrative expenses and were $0.7 million and $0.6 million for the three months ended June 30, 2016 and 2015, respectively and were $1.7 million and $1.0 million for the six months ended June 30, 2016 and 2015.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents and accounts receivable. The Company maintains the majority of its cash with two financial institutions.

Reclassification of Prior Period Balance

Reclassification of Prior Period Balance

Certain reclassifications have been made to prior periods amounts to conform to the current period financial statement presentation including adjusting footnotes within to reflect the presentation of discontinued operations. These reclassifications have no effect on previously reported net loss.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 requires that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Under this guidance, a company makes additional estimates regarding performance conditions and the allocation of variable consideration. The guidance is effective in fiscal years beginning January 1, 2018, with early adoption permitted. The Company is currently evaluating the impact of ASU 2014-09. The Company has not yet selected a transition method nor has it determined the effect of the standard on its consolidated financial position and results of operations.

In June 2014, the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments when the terms of an award provide that a performance target could be achieved after the requisite service period ("ASU 2014-12"). ASU 2014-12 clarifies the period over which compensation cost would be recognized in awards with a performance target that affects vesting and that could be achieved after the requisite service period. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective in fiscal years beginning after January 1, 2016, with early adoption permitted. The Company has adopted ASU 2014-12 on January 1, 2016 and its adoption did not have an impact on the consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements- Going Concern ("ASU 2014-15"). ASU No. 2014-15 requires management to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.  The new standard is effective for fiscal years ending after December 15, 2016 and interim periods within annual periods beginning after 15 December 2016.  Early adoption is permitted. The Company concluded, that if this standard had been adopted as of June 30, 2016 substantial doubt about the Company’s ability to continue as a going concern would not exist.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 amends existing guidance and requires entities to measure most inventory at the lower of cost and net realizable value. The guidance is effective prospectively for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. Upon adoption, entities must disclose the nature of and reason for the accounting change. The Company is currently evaluating the impact of ASU 2015-11.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations,Simplifying the Accounting for Measurement Period Adjustments ("ASU 2015-16"). ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date. The guidance is effective in 2016 for calendar year-end public entities. Early adoption is permitted. The Company has adopted ASU 2015-16 on January 1, 2016 and its adoption did not have an impact on the consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update 2016-01 ("ASU 2016-01"), Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 changes the current GAAP model for the accounting of equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. All equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value through earnings. There will no longer be an available-for-sale classification (changes in fair value reported in other comprehensive income (loss)) for equity securities with readily determinable fair values. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The classification and measurement guidance will be effective in fiscal years beginning after December 15, 2017, and interim periods within those years. The Company is currently evaluating the impact of ASU 2016-01.

In February 2016, the FASB issued ASU No. 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize the assets and liabilities on their balance sheet for the rights and obligations created by most leases and continue to recognize expenses on their income statements over the lease term.  It will also require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-02.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those years. Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-09.

Fair Value of Financial Instruments

The Company adopted the FASB Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”) related to the fair value measurement of certain of its assets and liabilities. ASC 820 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. When estimating fair value, depending on the nature and complexity of the asset or liability, the Company may use one or all of the following approaches:

• Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.

• Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance for functional and/or economic obsolescence.

• Income approach, which is based on the present value of the future stream of net cash flows.

To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, as described in ASC 820, of which the first two are considered observable and the last unobservable:

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 in which there is little or no market data available, which require the reporting entity to develop its own assumptions

Certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other liabilities are carried at cost, which approximates their fair value because of the short-term maturity of these financial instruments.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist of amounts due from third-party payors, patients, third-party distributors and government agencies. The Company records an allowance for doubtful accounts at the time potential collection risk is identified. The Company estimates its allowance based on historical experience, assessment of specific risk, discussions with individual customers or various assumptions and estimates that are believed to be reasonable under the circumstances. The Company believes the reserve is adequate to mitigate current collection risk.

Inventories

Inventories are held at the lower of cost or market, determined under the first-in, first-out method, and include the costs of material, labor and overhead. Inventory has been recorded at cost as of June 30, 2016 and December 31, 2015. Work in process is calculated based upon a buildup in the stage of completion using estimated labor inputs for each stage in production. The Company reviews inventories for net realizable value based on quantities on hand and expectations of future use.

Other Intangible Assets

The Company’s finite-lived intangible assets are stated at cost less accumulated amortization. The Company assesses its intangible and other long-lived assets for impairment whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable. The Company recognizes an impairment loss for intangibles and other finite-lived assets if the carrying amount of a long-lived asset is not recoverable based on its undiscounted future cash flows. Any such impairment loss is measured as the difference between the carrying amount and the fair value of the asset. The estimation of useful lives and expected cash flows requires the Company to make significant judgments regarding future periods that are subject to some factors outside its control. Changes in these estimates can result in significant revisions to the carrying value of these assets and may result in material charges to the results of operations.

Product Warranty Costs

The Company provides a four-year warranty on its PDMs sold in the United States and a five year warranty on its PDMs sold in Canada and may replace any Omnipods 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. Warranty expense is recorded in cost of goods sold on the statement of operations. As these estimates are based on historical experience, and the Company continues to introduce new products and versions, the Company also considers the anticipated performance of the product over its warranty period in estimating warranty reserves.

Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of FASB ASC 718-10, Compensation — Stock Compensation (“ASC 718-10”), which requires all share-based payments to employees, including grants of employee stock options and restricted stock units, to be recognized in the income statement based on their fair values. Share-based payments that contain performance conditions are recognized when such conditions are probable of being achieved.

The Company uses the Black-Scholes option pricing model to determine the weighted-average fair value of options granted. The Company determines the intrinsic value of restricted stock units based on the closing price of its common stock on the date of grant. The Company recognizes the compensation expense of share-based awards on a straight-line basis for awards with only service conditions and on an accelerated method for awards with performance conditions. Compensation expense is recognized over the vesting period of the awards.

The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the stock price and the following assumptions, including expected volatility, expected life of the awards, the risk-free interest rate, and the dividend yield. The expected volatility is computed over expected terms based upon the historical volatility of the Company's stock. The expected life of the awards is estimated based on the midpoint scenario, which combines historical exercise data with hypothetical exercise data for outstanding options. The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of the awards. The dividend yield assumption is based on Company history and expectation of paying no dividends. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense recognized in the financial statements is based on awards that are ultimately expected to vest. The Company evaluates the assumptions used to value the awards on a quarterly basis and if factors change and different assumptions are utilized, stock-based compensation expense may differ significantly from what has been recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect in the years in which the differences are expected to reverse. The Company reviews its deferred tax assets for recoverability considering historical profitability, projected future taxable income, and the expected timing of the reversals of existing temporary differences and tax planning strategies. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company follows the provisions of FASB ASC 740-10, Income Taxes (“ASC 740-10”) on accounting for uncertainty in income taxes recognized in its financial statements. ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In addition, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company recognizes estimated interest and penalties for uncertain tax positions in income tax expense.

The Company files federal, state and foreign tax returns. These returns are generally open to examination by the relevant tax authorities from three to four years from the date they are filed. The tax filings relating to the Company's federal and state tax returns are currently open to examination for tax years 2012 through 2014 and 2010 through 2014, respectively. In addition, the Company has generated tax losses since its inception in 2000. These years may be subject to examination if the losses are carried forward and utilized in future years.

Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision-maker ("CODM") in deciding how to allocate resources to an individual segment and in assessing performance of the segment. The Company has concluded that their Chief Executive Officer is the CODM as he is the ultimate decision maker for key operating decisions, determining the allocation of resources and assessing the financial performance of the Company. These decisions, allocations and assessments are performed by the CODM using consolidated financial information. Consolidated financial information is utilized by the CODM as the Company’s current product offering primarily consists of the Omnipod System and drug delivery. The Company’s products are relatively consistent and manufacturing is centralized and consistent across product offerings. Based on these factors, key operating decisions and resource allocations are made by the CODM using consolidated financial data and as such the Company has concluded that they operate as one segment.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Schedule of revenue from major customers

Revenue for customers comprising more than 10% of total revenue were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
Amgen, Inc.	16%	12%	17%	11%
Ypsomed Distribution AG	15%	10%	15%	*
RGH Enterprises, Inc.	11%	14%	11%	13%

^{* Customer represents less than 10% of revenue for the period.}

Customers that represented greater than 10% of accounts receivable as of June 30, 2016 and December 31, 2015 were as follows:

	June 30, 2016		December 31, 2015
Amgen, Inc.	21	%	22	%
Ypsomed Distribution AG	17	%	19	%

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Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Schedule of discontinued operations

The following is a summary of the operating results of Neighborhood Diabetes included in discontinued operations for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2016			2015		2016			2015
Discontinued operations:
Revenue (1)	$	—		$	15,037	$	7,730		$	28,104
Cost of revenue	—			11,177		5,369			20,630
Gross profit	—			3,860		2,361			7,474
Operating and other (income) expenses	(153		)	2,003		2,328			6,981
Loss on sale of Neighborhood Diabetes	—			—		1,264			—
Income (loss) from discontinued operations before taxes	153			1,857		(1,231		)	493
Income tax expense	—			22		408			50
Net income (loss) from discontinued operations(2)	$	153		$	1,835	$	(1,639	)	$	443

⁽¹⁾  Revenue for the three and six months ending June 30, 2016 includes revenue from the operations of Neighborhood Diabetes through date of sale in February 2016.

⁽²⁾  Income from discontinued operations for the three and six months ended June 30, 2015 resulted from a $2.7 million reduction in a previously recorded liability associated with sales and use tax audits based on final settlement in the second quarter of 2015.

The following is a summary of the Neighborhood Diabetes assets and liabilities presented as discontinued operations as of December 31, 2015:

	December 31, 2015
(In thousands)
ASSETS
Accounts receivable, net	$	5,857
Inventories, net	2,019
Prepaid expenses and other current assets	1,376
Current assets of discontinued operations	9,252
Intangible assets, net	1,788
Goodwill	140
Other non-current assets	28
Long-term assets of discontinued operations	1,956
Total assets of discontinued operations	$	11,208
LIABILITIES
Accounts payable	$	3,436
Accrued expenses and other current liabilities	1,883
Current liabilities of discontinued operations	5,319
Total liabilities of discontinued operations	$	5,319

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring and Nonrecurring Basis

The following table provides a summary of assets that are measured at fair value as of June 30, 2016, and December 31, 2015, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
June 30, 2016
Recurring fair value measurements:
Cash equivalents:
Money market mutual funds	$	41,297	$	41,297	$	—	$	—
Corporate bonds	5,574		—		5,574		—
U.S. government and agency bonds	4,998		—		4,998		—
Certificates of deposit	2,205		2,205		—		—
Total cash equivalents	$	54,074	$	43,502	$	10,572	$	—
Short-term investments:
U.S. government and agency bonds	$	13,784	$	10,022	$	3,762	$	—
Corporate bonds	11,824		—		11,824		—
Certificates of deposit	9,997		9,997		—		—
Total short-term investments	$	35,605	$	20,019	$	15,586	$	—
December 31, 2015
Recurring fair value measurements:
Cash equivalents:
Money market mutual funds	$	98,223	$	98,223	$	—	$	—
Non-recurring fair value measurements:
Long-lived assets held and used(1)	$	1,788	$	—	$	—	$	1,788

⁽¹⁾  Long-lived assets held and used relate to the asset group of the Neighborhood Diabetes business which consists of definite lived intangible assets and property and equipment. During the fourth quarter of 2015, the Company recognized an impairment charge on this asset group totaling $9.1 million, which represented the difference between the fair value of the asset group and the carrying value. As a result of the impairment, the asset group was recorded at fair value as of December 31, 2015. The fair value for the asset group was determined using the direct cash flows expected to be received from the disposition of the asset group, which was completed in February 2016 (level 3 input).    

Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis

The carrying amounts and the estimated fair values of financial instruments as of June 30, 2016, and December 31, 2015, are as follows (in thousands):

	June 30, 2016				December 31, 2015
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
2% Convertible senior notes	$	175,690	$	191,391	$	171,698	$	207,882

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Short-term Investments (Tables)

6 Months Ended

Jun. 30, 2016

Short-term Investments [Abstract]

Schedule of short-term investments

The Company's short-term investments are classified as available-for-sale and amortized costs, gross unrealized holding gains and losses, and fair values at June 30, 2016 are as follows (in thousands) and the Company did not have any short-term investments at December 31, 2015:

	Amortized cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2016
U.S. government and agency bonds	$	13,777	$	7	$	—		$	13,784
Corporate bonds	11,823		2		(1		)	11,824
Certificates of deposit	9,997		—		—			9,997
Total short-term investments	$	35,597	$	9	$	(1	)	$	35,605

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Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Outstanding Convertible Debt and Related Deferred Financing Costs

The Company had outstanding convertible debt and related deferred financing costs on its consolidated balance sheet as follows (in thousands):

	June 30, 2016			December 31, 2015
Principal amount of the 2% Convertible Senior Notes	$	201,250		$	201,250
Unamortized debt discount	(22,275		)	(25,704		)
Deferred financing costs	(3,285		)	(3,848		)
Long-term debt, net of discount	$	175,690		$	171,698

Interest and Other Expense

Interest expense related to the 2% Notes was included in interest and other expense on the consolidated statements of operations as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Contractual coupon interest	$	1,007	$	1,006	$	2,013	$	2,012
Accretion of debt discount	1,727		1,625		3,429		3,226
Amortization of debt issuance costs	281		281		563		563
Total interest and other expense	$	3,015	$	2,912	$	6,005	$	5,801

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Capital Lease Obligations (Tables)

6 Months Ended

Jun. 30, 2016

Leases, Capital [Abstract]

Schedule of Capital Leased Assets

Assets held under capital leases consist of the following (in thousands):

	June 30, 2016			December 31, 2015
Manufacturing equipment	$	13,705		$	13,705
Less: Accumulated amortization	(5,715		)	(4,346		)
Total	$	7,990		$	9,359

Schedule of Future Minimum Lease Payments for Capital Leases

The aggregate future minimum lease payments related to these capital leases as of June 30, 2016, are as follows (in thousands):

Years Ending December 31,	Minimum Lease Payments
2016 (remaining)	$	2,116
2017	269
Total future minimum lease payments	$	2,385
Interest expense	70
Total capital lease obligations	$	2,315

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure Potential Common Shares Excluded From Computation Of Diluted Net Loss Per Share [Abstract]

Potential Common Shares Excluded from Computation of Diluted Net Loss per Share

Potential dilutive common share equivalents consist of the following:

	Three and Six Months Ended June 30,
	2016	2015
2.00% Convertible Senior Notes	4,327,257	4,327,257
Unvested restricted stock units	999,186	948,554
Outstanding options	3,592,064	2,879,370
Total dilutive common shares	8,918,507	8,155,181

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Accounts Receivable and Allowance for Doubtful Accounts (Tables)

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Schedule of accounts receivable from major customers

Revenue for customers comprising more than 10% of total revenue were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
Amgen, Inc.	16%	12%	17%	11%
Ypsomed Distribution AG	15%	10%	15%	*
RGH Enterprises, Inc.	11%	14%	11%	13%

^{* Customer represents less than 10% of revenue for the period.}

Customers that represented greater than 10% of accounts receivable as of June 30, 2016 and December 31, 2015 were as follows:

	June 30, 2016		December 31, 2015
Amgen, Inc.	21	%	22	%
Ypsomed Distribution AG	17	%	19	%

Components of Accounts Receivable

The components of accounts receivable are as follows (in thousands):

	June 30, 2016			December 31, 2015
Trade receivables	$	42,351		$	46,668
Allowance for doubtful accounts	(3,651		)	(4,138		)
Total accounts receivable	$	38,700		$	42,530

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Inventories (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure Components Of Inventories [Abstract]

Components of Inventories

The components of inventories are as follows (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	1,262	$	632
Work-in-process	3,522		1,960
Finished goods, net	19,702		9,432
Total inventories	$	24,486	$	12,024

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Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Components of Other Intangible Assets

The components of other intangible assets are as follows (in thousands):

	June 30, 2016							December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Contractual relationships, net	$	2,067	$	(1,294	)	$	773	$	1,933	$	(1,000	)	$	933
Tradename	—		—			—		—		—			—
Total intangible assets	$	2,067	$	(1,294	)	$	773	$	1,933	$	(1,000	)	$	933

Amortization Expense Expected for Next Five Years

Amortization expense expected for the next five years and thereafter is as follows (in thousands):

Years Ending December 31,	Contractual Relationships
2016 (remaining)	$	226
2017	187
2018	160
2019	133
2020	67
Thereafter	—
Total	$	773

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Accrued Expenses and Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2016

Payables and Accruals [Abstract]

Components of accrued expenses and other current liabilities

The components of accrued expenses and other current liabilities are as follows (in thousands):

	June 30, 2016		December 31, 2015
Employee compensation and related items	$	14,572	$	16,856
Professional and consulting services	4,064		5,654
Suppliers	2,813		4,981
Other	8,489		9,253
Total accrued expenses and other current liabilities	$	29,938	$	36,744

Reconciliation of Changes in Product Warranty Liability

A reconciliation of the changes in the Company’s product warranty liability is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Balance at the beginning of the period	$	4,160		$	2,661		$	4,152		$	2,614
Warranty expense	1,112			1,254			2,139			1,721
Warranty claims settled	(978		)	(748		)	(1,997		)	(1,168		)
Balance at the end of the period	$	4,294		$	3,167		$	4,294		$	3,167

The composition of the product warranty liability balance is reported on the Consolidated Balance Sheets as follows (in thousands):

	June 30, 2016		December 31, 2015
Composition of balance:
Short-term	$	1,583	$	1,592
Long-term	2,711		2,560
	$	4,294	$	4,152

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Aggregate future minimum lease payments

The aggregate future minimum lease payments related to these leases as of June 30, 2016, are as follows (in thousands):

Years Ending December 31,	Minimum Lease Payments
2016 (remaining)	$	1,089
2017	2,181
2018	2,162
2019	2,169
2020	2,146
Thereafter	3,934
Total	$	13,681

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Equity (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock option activity

The following summarizes the activity under the Company’s stock option plans in the six months ended June 30, 2016:

	Number of Options (#)		Weighted Average Exercise Price ($)		Aggregate Intrinsic Value ($)
					(In thousands)
Balance, December 31, 2015	2,999,199		$	31.37
Granted	791,652		30.09
Exercised(1)	(64,851	)	16.73		$	997
Canceled	(133,936	)	32.39
Balance, June 30, 2016	3,592,064		$	31.32	$	6,690
Vested, June 30, 2016(2)	1,345,758		$	30.17	$	5,275
Vested and expected to vest, June 30, 2016(2)(3)	3,258,999				$	6,470

⁽¹⁾  The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of the date of exercise and the exercise price of the underlying options.

⁽²⁾  The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of June 30, 2016, and the exercise price of the underlying options.

⁽³⁾  Represents the number of vested options as of June 30, 2016, plus the number of unvested options expected to vest as of June 30, 2016, based on the unvested options outstanding at June 30, 2016, adjusted for the estimated forfeiture.

Summary of restricted stock units

The following table summarizes the status of the Company’s restricted stock units in the six months ended June 30, 2016:

	Number of Shares (#)		Weighted Average Grant Date Fair Value ($)
Balance, December 31, 2015	811,965		$	32.30
Granted	561,801		29.43
Vested	(287,059	)	30.69
Forfeited	(87,521	)	33.65
Balance, June 30, 2016	999,186		$	31.05

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income tax expense (benefit)

Income tax expense, excluding the historical amounts related to discontinued operations, consists of the following (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2016			2015		2016			2015
Current	$	137		$	15	$	212		$	39
Deferred	(72		)	—		(83		)	—
Total	$	65		$	15	$	129		$	39

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Worldwide revenue by products

Worldwide revenue for the Company's products is categorized as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
U.S. Omnipod	$	56,337	$	45,402	$	107,050	$	85,097
International Omnipod	16,559		7,640		31,939		11,420
Drug Delivery	14,434		7,509		29,554		12,182
Total	$	87,330	$	60,551	$	168,543	$	108,699

Geographic information about revenue

Geographic information about revenue, based on the region of the customer's shipping location, is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
United States	$	70,771	$	52,911	$	136,604	$	97,279
All other	16,559		7,640		31,939		11,420
Total	$	87,330	$	60,551	$	168,543	$	108,699

Geographic information about long-lived assets

Geographic information about long-lived assets, net, excluding goodwill and other intangible assets is as follows (in thousands):

	June 30, 2016		December 31, 2015
United States	$	14,558	$	13,018
China	26,486		28,638
Other	175		213
Total	$	41,219	$	41,869

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Nature of Business (Details)	Jun. 30, 2016 in
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of inches of tubing in conventional insulin pump (in inches)	42

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Summary of Significant Accounting Policies (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($) location	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) segment location	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Accounting Policies [Abstract]
Foreign currency transaction gain (loss), before tax	$ 0	$ 0	$ 0	$ 0
Restricted cash	1,200,000		1,200,000		$ 1,200,000
Property and equipment, accumulated depreciation	34,800,000		$ 34,800,000		28,200,000
Number of operating segments (in segments) | segment			1
Goodwill impairment loss	0	0	$ 0	0
Return period			45 days
Return period Canada			90 days
Significant Accounting Policies [Line Items]
Deferred revenue	1,700,000		$ 1,700,000		$ 2,500,000
Shipping and handling costs	$ 700,000	$ 600,000	$ 1,700,000	$ 1,000,000
Number of accredited financial institutions which the Company maintains the majority of its cash | location	2		2
Percentage of accounts payable, accrued expenses, and other current liabilities			34.00%		28.00%
Total revenue | Customer concentration risk | Amgen, Inc.
Significant Accounting Policies [Line Items]
Concentration risk, percentage	16.00%	12.00%	17.00%	11.00%
Total revenue | Customer concentration risk | Ypsomed Distribution AG
Significant Accounting Policies [Line Items]
Concentration risk, percentage	15.00%	10.00%	15.00%
Total revenue | Customer concentration risk | RGH Enterprises, Inc.
Significant Accounting Policies [Line Items]
Concentration risk, percentage	11.00%	14.00%	11.00%	13.00%
Other long-term liabilities
Significant Accounting Policies [Line Items]
Deferred revenue	$ 400,000		$ 400,000		$ 200,000

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Discontinued Operations - Narrative (Details) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2016	Feb. 28, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Discontinued operation, period of continuing involvement after disposal					6 months
Discontinued operation, intra-entity amounts, discontinued operation after disposal, expense			$ 400		$ 700
Revenue			87,330	$ 60,551	168,543	$ 108,699
Cash provided by (used in) operating activities, discontinued operations			0	500	2,000	900
Neighborhood Diabetes, Subsidiary of Liberty Medical
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue			0	$ 700	300	$ 1,200
Neighborhood Diabetes
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestiture of interest in subsidiaries and affiliates	$ 1,200	$ 6,200
Neighborhood Diabetes | Neighborhood Diabetes, Subsidiary of Liberty Medical
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Discontinued operation, intra-entity amounts, discontinued operation after disposal, revenue			$ 100		$ 400

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Discontinued Operations - Income Statement and Balance Sheet Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Income tax expense	$ 0	$ 22	$ 408	$ 50
Net income (loss) from discontinued operations(2)	153	1,835	(1,639)	443
Reduction to liability during the period		2,700
ASSETS
Current assets of discontinued operations	0		0		$ 9,252
Long-term assets of discontinued operations	0		0		1,956
LIABILITIES
Current liabilities of discontinued operations	0		0		5,319
Neighborhood Diabetes
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Revenue	0	15,037	7,730	28,104
Cost of revenue	0	11,177	5,369	20,630
Gross profit	0	3,860	2,361	7,474
Operating and other (income) expenses	(153)	2,003	2,328	6,981
Loss on sale of Neighborhood Diabetes	0	0	1,264	0
Income (loss) from discontinued operations before taxes	153	1,857	(1,231)	493
Income tax expense	0	22	408	50
Net income (loss) from discontinued operations(2)	$ 153	$ 1,835	$ (1,639)	$ 443
ASSETS
Accounts receivable, net					5,857
Inventories, net					2,019
Prepaid expenses and other current assets					1,376
Current assets of discontinued operations					9,252
Intangible assets, net					1,788
Goodwill					140
Other non-current assets					28
Long-term assets of discontinued operations					1,956
Total assets of discontinued operations					11,208
LIABILITIES
Accrued expenses and other current liabilities					3,436
Accrued expenses and other current liabilities					1,883
Current liabilities of discontinued operations					5,319
Total liabilities of discontinued operations					$ 5,319

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Fair Value Measurements - Schedule of Assets Measured on a Recurring and Nonrecurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Jun. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment of long-lived assets to be disposed of	$ 9,100
Recurring fair value measurements:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		$ 54,074
Short-term investments:		35,605
Recurring fair value measurements: | Money market mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	98,223	41,297
Recurring fair value measurements: | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		5,574
Short-term investments:		11,824
Recurring fair value measurements: | U.S. government and agency bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		4,998
Short-term investments:		13,784
Recurring fair value measurements: | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		2,205
Short-term investments:		9,997
Non-recurring fair value measurements:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-Lived Assets Held and Used	1,788
Level 1 | Recurring fair value measurements:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		43,502
Short-term investments:		20,019
Level 1 | Recurring fair value measurements: | Money market mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	98,223	41,297
Level 1 | Recurring fair value measurements: | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		0
Short-term investments:		0
Level 1 | Recurring fair value measurements: | U.S. government and agency bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		0
Short-term investments:		10,022
Level 1 | Recurring fair value measurements: | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		2,205
Short-term investments:		9,997
Level 1 | Non-recurring fair value measurements:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-Lived Assets Held and Used	0
Level 2 | Recurring fair value measurements:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		10,572
Short-term investments:		15,586
Level 2 | Recurring fair value measurements: | Money market mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	0	0
Level 2 | Recurring fair value measurements: | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		5,574
Short-term investments:		11,824
Level 2 | Recurring fair value measurements: | U.S. government and agency bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		4,998
Short-term investments:		3,762
Level 2 | Recurring fair value measurements: | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		0
Short-term investments:		0
Level 2 | Non-recurring fair value measurements:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-Lived Assets Held and Used	0
Level 3 | Recurring fair value measurements:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		0
Short-term investments:		0
Level 3 | Recurring fair value measurements: | Money market mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	0	0
Level 3 | Recurring fair value measurements: | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		0
Short-term investments:		0
Level 3 | Recurring fair value measurements: | U.S. government and agency bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		0
Short-term investments:		0
Level 3 | Recurring fair value measurements: | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:		0
Short-term investments:		$ 0
Level 3 | Non-recurring fair value measurements:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-Lived Assets Held and Used	$ 1,788

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Fair Value Measurements - Schedule of Liabilities Measure on Recurring and Nonrecurring Basis (Details) - 2% Convertible senior notes - Level 1 - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
2% Convertible senior notes	$ 175,690	$ 171,698
Estimated Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
2% Convertible senior notes	$ 191,391	$ 207,882

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Fair Value Measurements - Additional Information (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Principal amount of Senior Notes	$ 201,250	$ 201,250
Unamortized discount	$ 22,275	$ 25,704
2% Convertible senior notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Principal amount of Senior Notes			$ 201,300
Debt, interest rate	2.00%		2.00%
Unamortized discount	$ 22,300

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Short-term Investments (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 35,597,000
Gross Unrealized Gains	9,000
Gross Unrealized Losses	(1,000)
Fair Value	35,605,000	$ 0
U.S. government and agency bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	13,777,000
Gross Unrealized Gains	7,000
Gross Unrealized Losses	0
Fair Value	13,784,000
Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	11,823,000
Gross Unrealized Gains	2,000
Gross Unrealized Losses	(1,000)
Fair Value	11,824,000
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	9,997,000
Gross Unrealized Gains	0
Gross Unrealized Losses	0
Fair Value	$ 9,997,000

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Debt - Outstanding Convertible Debt and Related Deferred Financing Costs (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
Principal amount of Senior Notes	$ 201,250	$ 201,250
Unamortized discount	(22,275)	(25,704)
Deferred financing costs	(3,285)	(3,848)
Long-term debt, net of discount	$ 175,690	$ 171,698

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Debt - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Debt Disclosure [Abstract]
Contractual coupon interest	$ 1,007	$ 1,006	$ 2,013	$ 2,012
Accretion of debt discount	1,727	1,625	3,429	3,226
Amortization of debt issuance costs	281	281	563	563
Interest and Other Expense, Total	$ 3,015	$ 2,912	$ 6,005	$ 5,801

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Debt - Narrative (Details)		1 Months Ended			3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 20, 2014	Jul. 31, 2014 USD ($) shares	Jun. 30, 2014 USD ($) $ / shares	Jun. 30, 2011 USD ($) $ / shares	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Principal amount of Senior Notes					$ 201,250,000		$ 201,250,000			$ 201,250,000
Unamortized discount					22,275,000		22,275,000			25,704,000
Shares Issued with debt conversion (shares) | shares		348,535
Issuance of common stock pursuant to conversion of debt		$ 12,600,000
Loss on debt extinguishment									$ 23,200,000
Non-cash interest							3,992,000	$ 3,789,000
Long-term debt, net of discount					$ 175,690,000		175,690,000			$ 171,698,000
Investor
Debt Instrument [Line Items]
Principal amount of modified debt held				$ 73,000,000.0
5.375% Convertible Notes
Debt Instrument [Line Items]
Debt, interest rate				5.375%
Payments of long-term debt				$ 85,100,000
5.375% Convertible Notes | Investor
Debt Instrument [Line Items]
Repurchase premium				21.50%
Unamortized discount				$ 10,500,000
5.375% Convertible Notes | Investor
Debt Instrument [Line Items]
Principal amount of Senior Notes				70,000,000
Principal amount of modified debt held				$ 13,500,000.0
3.75% Convertible Notes
Debt Instrument [Line Items]
Debt, interest rate				3.75%
Principal amount of Senior Notes				$ 143,800,000
Debt conversion rate				38.1749
Principal amount per note used in conversion rate				$ 1,000
Conversion price, per share (USD per share) | $ / shares				$ 26.20
Payments of long-term debt			$ 160,700,000
Deferred financing costs, amortization period				5 years
Debt instrument, repurchased face amount			114,900,000
Debt Instrument repurchase premium in dollars			45,800,000
Principal amount of old debt held			80,000,000
Amount allocated to debt		27,900,000	112,400,000						140,300,000
Amount allocated to equity		13,500,000	48,300,000
Percentage required of the last reported sale price per share of the Company's common stock for redemption	130.00%
Number of trading days	20 days
Number of consecutive trading days	30 days
Long-term debt			$ 28,800,000						$ 0
Principal amount of debt converted		28,500,000
Total consideration paid		41,100,000
Debt instrument, redemption, principal amount		300,000
Repayment of remaining principal amount including interest		$ 300,000
Interest expense related to Notes							$ 0	0
3.75% Convertible Notes | Modified Debt
Debt Instrument [Line Items]
Unamortized discount				$ 25,800,000
Nonconvertible debt borrowing rate				16.50%
Transaction fees				$ 2,000,000
3.75% Convertible Notes | Debt discount related to premium payment in connection with the purchase of
Debt Instrument [Line Items]
Unamortized discount				15,100,000
3.75% Convertible Notes | Debt discount related to the increase in the value of the conversion feature.
Debt Instrument [Line Items]
Unamortized discount				200,000
3.75% Convertible Notes | New Debt
Debt Instrument [Line Items]
Unamortized discount				$ 26,600,000
Nonconvertible debt borrowing rate				12.40%
Principal debt amount issued to new investors				$ 84,300,000
Debt discount amortization period				5 years
Finance costs reclassified against equity				$ 900,000
Deferred financing costs				2,800,000
3.75% Convertible Notes | Investor
Debt Instrument [Line Items]
Principal amount of modified debt held				$ 59,500,000.0
2% Convertible senior notes
Debt Instrument [Line Items]
Debt, interest rate			2.00%		2.00%		2.00%
Principal amount of Senior Notes			$ 201,300,000
Debt conversion rate			21.5019
Principal amount per note used in conversion rate			$ 1,000
Conversion price, per share (USD per share) | $ / shares			$ 46.51
Unamortized discount					$ 22,300,000		$ 22,300,000
Nonconvertible debt borrowing rate			6.20%
Deferred financing costs, amortization period			5 years
Debt discount amortization period			5 years
Deferred financing costs, gross			$ 6,700,000
Finance costs reclassified against equity			1,200,000
Portion of 2% Notes purchased by 3.75% holders			$ 98,200,000
Interest expense related to Notes					1,000,000	$ 1,000,000	2,000,000	2,000,000
Non-cash interest					$ 2,000,000	$ 1,900,000	$ 4,000,000	$ 3,800,000
2% Convertible senior notes | First 180 days
Debt Instrument [Line Items]
Debt instrument, additional interest in event of reporting violation			0.50%
Debt instrument, redemption period			360 days
2% Convertible senior notes | Up to 360 days
Debt Instrument [Line Items]
Debt instrument, additional interest in event of reporting violation			0.25%
Debt instrument, redemption period			180 days
2% Convertible senior notes | Investor
Debt Instrument [Line Items]
Unamortized discount			$ 35,600,000

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Capital Lease Obligations - Additional information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Capital Leased Assets [Line Items]
Interest expense	$ 100	$ 400	$ 300	$ 700
Minimum
Capital Leased Assets [Line Items]
Repayment period for capital lease obligations			24 months
Capital leases of lessee, contingent rentals, effective interest rate			13.00%
Maximum
Capital Leased Assets [Line Items]
Repayment period for capital lease obligations			36 months
Capital leases of lessee, contingent rentals, effective interest rate			17.00%
Machinery and Equipment
Capital Leased Assets [Line Items]
Manufacturing equipment	13,705		$ 13,705		$ 13,705
Property, plant and equipment, useful life			5 years
Amortization expense	$ 700	$ 600	$ 1,400	$ 1,100

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Capital Lease Obligations - Schedule of Capital Leased Assets (Details) - Machinery and Equipment - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Capital Leased Assets [Line Items]
Manufacturing equipment	$ 13,705	$ 13,705
Less: Accumulated amortization	(5,715)	(4,346)
Total	$ 7,990	$ 9,359

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Capital Lease Obligations - Schedule of Future Minimum Lease Payments for Capital Leases (Details) $ in Thousands	Jun. 30, 2016 USD ($)
Leases, Capital [Abstract]
2016 (remaining)	$ 2,116
2017	269
Total future minimum lease payments	2,385
Interest expense	70
Total capital lease obligations	$ 2,315

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Net Loss Per Share - Potential Common Shares Excluded from Computation of Diluted Net Loss Per Share (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total dilutive common shares (in shares)	8,918,507	8,155,181	8,918,507	8,155,181
2% Convertible senior notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total dilutive common shares (in shares)	4,327,257	4,327,257	4,327,257	4,327,257
Unvested restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total dilutive common shares (in shares)	999,186	948,554	999,186	948,554
Outstanding options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total dilutive common shares (in shares)	3,592,064	2,879,370	3,592,064	2,879,370

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Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Concentration Risk [Line Items]
Trade receivables	$ 42,351	$ 46,668
Allowance for doubtful accounts	(3,651)	(4,138)
Total accounts receivable	$ 38,700	$ 42,530
Amgen, Inc. | Customer concentration risk | Accounts receivable
Concentration Risk [Line Items]
Concentration risk, percentage	21.00%	22.00%
Ypsomed Distribution AG | Customer concentration risk | Accounts receivable
Concentration Risk [Line Items]
Concentration risk, percentage	17.00%	19.00%

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Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Disclosure Components Of Inventories [Abstract]
Raw materials	$ 1,262	$ 632
Work-in-process	3,522	1,960
Finished goods, net	19,702	9,432
Total inventories	$ 24,486	$ 12,024

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Other Intangible Assets - Narrative (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 31, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Dec. 31, 2011
Acquired Finite-Lived Intangible Assets [Line Items]
Impairment of intangible assets, finite-lived						$ 9,000,000
Amortization of other intangible assets		$ 100,000	$ 0	$ 200,000	$ 0
Intangible asset, weighted average amortization period				4 years 6 months
Contractual relationships, net
Acquired Finite-Lived Intangible Assets [Line Items]
Impairment of intangible assets, finite-lived						7,400,000
Tradename
Acquired Finite-Lived Intangible Assets [Line Items]
Impairment of intangible assets, finite-lived						$ 1,600,000
Neighborhood Holdings Inc
Acquired Finite-Lived Intangible Assets [Line Items]
Other intangible assets cost							$ 32,900,000
GSK Asset Acquisition | Contractual relationships, net
Acquired Finite-Lived Intangible Assets [Line Items]
Other intangible assets cost	$ 2,100,000
GSK Asset Acquisition | Contractual relationships, net | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated useful life				5 years

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Other Intangible Assets - Components of Other Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Acquired Finite-Lived Intangible Assets [Line Items]
Other intangible assets cost	$ 2,067	$ 1,933
Less: Accumulated amortization	(1,294)	(1,000)
Total	773	933
Contractual relationships, net
Acquired Finite-Lived Intangible Assets [Line Items]
Other intangible assets cost	2,067	1,933
Less: Accumulated amortization	(1,294)	(1,000)
Total	773	933
Tradename
Acquired Finite-Lived Intangible Assets [Line Items]
Other intangible assets cost	0	0
Less: Accumulated amortization	0	0
Total	$ 0	$ 0

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Other Intangible Assets - Amortization Expense Expected for Next Five Years (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Expected Amortization Expense [Line Items]
Total	$ 773	$ 933
Contractual Relationships
Expected Amortization Expense [Line Items]
2016 (remaining)	226
2017	187
2018	160
2019	133
2020	67
Thereafter	0
Total	$ 773	$ 933

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Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Employee compensation and related items	$ 14,572	$ 16,856
Professional and consulting services	4,064	5,654
Suppliers	2,813	4,981
Other	8,489	9,253
Total accrued expenses and other current liabilities	$ 29,938	$ 36,744

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Accrued Expenses and Other Current Liabilities - Narrative (Details)	6 Months Ended
	Jun. 30, 2016
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

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Accrued Expenses and Other Current Liabilities - Product Warranty Liability (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Dec. 31, 2015
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at the beginning of the period	$ 4,160	$ 2,661	$ 4,152	$ 2,614
Warranty expense	1,112	1,254	2,139	1,721
Warranty claims settled	(978)	(748)	(1,997)	(1,168)
Balance at the end of the period	4,294	3,167	4,294	3,167
Composition of balance:
Short-term					$ 1,583	$ 1,592
Long-term					2,711	2,560
Total warranty balance	$ 4,160	$ 2,661	$ 4,152	$ 2,614	$ 4,294	$ 4,152

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Commitments and Contingencies - Aggregate Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2016 USD ($)
Minimum Lease Payments
2016 (remaining)	$ 1,089
2017	2,181
2018	2,162
2019	2,169
2020	2,146
Thereafter	3,934
Total	$ 13,681

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Commitments and Contingencies - Legal Proceedings (Details) $ in Millions	1 Months Ended			12 Months Ended
	May 31, 2016 USD ($)	Apr. 30, 2016 USD ($)	Jun. 16, 2015 LegalMatter	Jun. 30, 2016 USD ($) LegalMatter	Dec. 31, 2015 USD ($)
Loss Contingencies [Line Items]
Loss accrual				$ 0.4	$ 0.4
Number of class actions filed (in legal matters) | LegalMatter			3
Number of class actions dismissed (in legal matters) | LegalMatter				2
Massachusetts Department of Revenue
Loss Contingencies [Line Items]
Litigation settlement, expense		$ 0.5
Reduction to accrual		$ 0.2
Connecticut Department of Social Services Office of Quality Assurance Audit
Loss Contingencies [Line Items]
Litigation settlement	$ 0.5

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Equity - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based compensation expense	$ 5.5	$ 4.3	$ 10.8	$ 9.6
Total unrecognized compensation expense	$ 48.9		$ 48.9

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Equity - Stock Options Narrative (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for future issuance (in shares)	4,515,161		4,515,161
Shares granted during the period (in shares)			791,652
Options outstanding (in shares)	3,592,064		3,592,064		2,999,199
Options outstanding, weighted average exercise price (in dollars per share)	$ 31.32		$ 31.32		$ 31.37
Options outstanding, weighted average remaining contractual life			8 years 3 months 18 days
Options exercisable (in shares)	1,345,758		1,345,758
Options exercisable, weighted average exercise price (in dollars per share)	$ 30.17		$ 30.17
Options exercisable, weighted average remaining contractual life			7 years
Stock-based compensation expense	$ 5.5	$ 4.3	$ 10.8	$ 9.6
Total unrecognized compensation expense	48.9		$ 48.9
Performance based stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted during the period (in shares)					194,500
Performance based stock options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period					4 years
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years
Expiration period			10 years
Stock-based compensation expense	2.5	$ 2.0	$ 4.8	$ 5.0
Total unrecognized compensation expense	$ 23.1		$ 23.1
Total unrecognized compensation expense weighted-average period			1 year 4 months 24 days

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Equity - Stock Option Activity (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) $ / shares shares
Number of Options
Beginning balance (in shares)	2,999,199
Granted (in shares)	791,652
Exercised (in shares)	(64,851)
Canceled (in shares)	(133,936)
Ending balance (in shares)	3,592,064
Vested, at end of period (in shares)	1,345,758
Vested and expected to vest, at end of period (in shares)	3,258,999
Weighted Average Exercise Price
Beginning balance (in dollars per share) | $ / shares	$ 31.37
Granted (in dollars per share) | $ / shares	30.09
Exercised (in dollars per share) | $ / shares	16.73
Canceled (in dollars per share) | $ / shares	32.39
Ending balance (in dollars per share) | $ / shares	31.32
Vested, at end of period (in dollars per share) | $ / shares	$ 30.17
Aggregate Intrinsic Value
Exercised | $	$ 997
Ending balance | $	6,690
Vested, at end of period | $	5,275
Vested and expected to vest, at end of period | $	$ 6,470

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Equity - Restricted Stock Units Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 5,500,000	$ 4,300,000	$ 10,800,000	$ 9,600,000
Total unrecognized compensation expense	48,900,000		$ 48,900,000
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted during the period (in shares)			149,256
Stock-based compensation expense	500,000	0	$ 1,200,000	0
Unvested restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted during the period (in shares)			561,801
Stock-based compensation expense	2,400,000	$ 2,300,000	$ 4,800,000	$ 4,600,000
Other than options - granted in period, weighted average fair value (in dollars per share)			$ 29.43
Other than options - grant date fair value (in dollars per share)			$ 16,500,000
Total unrecognized compensation expense	$ 25,800,000		$ 25,800,000
Total unrecognized compensation expense weighted-average period			1 year 1 month 6 days
Unvested restricted stock units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years

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Equity - Summary of Restricted Stock Units (Details) - Unvested restricted stock units	6 Months Ended
	Jun. 30, 2016 $ / shares shares
Number of Shares
Beginning balance (in shares) | shares	811,965
Granted (in shares) | shares	561,801
Vested (in shares) | shares	(287,059)
Forfeited (in shares) | shares	(87,521)
Ending balance (in shares) | shares	999,186
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share) | $ / shares	$ 32.30
Granted (in dollars per share) | $ / shares	29.43
Vested (in dollars per share) | $ / shares	30.69
Forfeited (in dollars per share) | $ / shares	33.65
Ending balance (in dollars per share) | $ / shares	$ 31.05

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Equity - Employee Stock Purchase Plan Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense (less than)	$ 5.5	$ 4.3	$ 10.8	$ 9.6
Employee Stock Purchase Plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued under employee stock purchase plan (in shares)	0		0
Stock-based compensation expense (less than)	$ 0.1	$ 0.1	$ 0.1	$ 0.1

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Income Taxes - Narrative (Detail)	6 Months Ended
	Jun. 30, 2016 USD ($)
Significant Accounting Policies [Line Items]
Unrecognized tax benefits	$ 0
Minimum
Significant Accounting Policies [Line Items]
Number of open tax years	3 years
Maximum
Significant Accounting Policies [Line Items]
Number of open tax years	4 years

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Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Current	$ 137	$ 15	$ 212	$ 39
Deferred	(72)	0	(83)	0
Total	$ 65	$ 15	$ 129	$ 39

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Segment Reporting (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) segment	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments (in segments) | segment			1
Revenues	$ 87,330	$ 60,551	$ 168,543	$ 108,699
Long-lived assets	41,219		41,219		$ 41,869
United States
Segment Reporting Information [Line Items]
Revenues	70,771	52,911	136,604	97,279
Long-lived assets	14,558		14,558		13,018
All other
Segment Reporting Information [Line Items]
Revenues	16,559	7,640	31,939	11,420
China
Segment Reporting Information [Line Items]
Long-lived assets	26,486		26,486		28,638
Other
Segment Reporting Information [Line Items]
Long-lived assets	175		175		$ 213
U.S. Omnipod
Segment Reporting Information [Line Items]
Revenues	56,337	45,402	107,050	85,097
International Omnipod
Segment Reporting Information [Line Items]
Revenues	16,559	7,640	31,939	11,420
Drug Delivery
Segment Reporting Information [Line Items]
Revenues	$ 14,434	$ 7,509	$ 29,554	$ 12,182