No. of Recommendations: 1
Q4
Rev Est -> 47.44 Actual ->$47.2 (miss) (+70% yoy)
EPS Est -> -0.26 Actual ->-0.30 (miss)

Full Year
Rev Est -> 152.42 Actual -> $152.3 (miss) (+57% yoy)
EPS Est -> -1.18 Actual -> -1.22 (miss)
152.3 MM 2011 vs 97 MM 2010

Revenue up 30% excluding acquisition

Yposomed -> Germany, Netherlands, Switzerland, UK going well
GSK -> Canada going well

Next Gen launch of OmniPod in June 2012

Goal: All current OmniPod user upgraded by Jan 2013

2nd manufacturing line operational 2nd quarter, end year with capacity of 750,000 - 1 MM pods / month

60-65% GM on new Pod

Expand commercial team, hiring 24 commercial team members, starting in March

2012 Guidance
Full year $210-$225 MM (40-50% growth)
Operating cash flow (EBITDA) profitable 2nd half of 2012
GM 42-46%, due to transistion to next gen system, jumping in Q1 2013
OpEx 30 MM/qtr

Q1 rev of 47-48MM

????????????????????????????????????????????????????????????????????????
1) Neighboorhood reveune? 12MM for quarter, growth in low teens moving forward
2) FDA questions? Clarification of reports, no more clinical work
3) GM progress in 2012, or flucuate? Its all about how fast costomers covert over, as cost of handheld of borne by us, so its tough to predict GM. For Q1 2013 +10 points of GM, with end goal of +15
4) Bottleneck of training? Manufacturing is the key, never want to convert them back to old system
5) Salesforce expansion? mostly inside sales
6) Neighboorhood cross selling? contracts first, patients second. Testing with a few plans in first couple months, more of a 2nd half of year
7) Whats the ramp? Big hit in Q2 of patients waiting? We dont know, but there is no reason for a patient to wait, since its a free upgrade
8) Capacity on fist line in case 2nd line not up? We can always delay if necessary, but its all about the manufacturing lines
9) Synergies from neighborhood? we think we can really grow it across the country and outside the US
10) Any expenses one time for 2012? Not a lot of change from 2011, with a few million in one time due to launch
11) international range? don't disclose, but use US growth as an indicator
12) Other markets for launch? 2012 China, France taking longer than expect
13) Retention? flat from q3, 9%
14) Cross selling? Lots of operating leverage once it begins
15) Type 1s with neighborhood, and how many are potential for OmniPod? 18k insulin dependent, 90%+ could qualify for pump
16) SGA cost 50% sales, what has to change to get that lower? Next gen launch with 10-15 points of GM at top line, focusing on top clinics

??????????????????????????????????????????????????????????????????????

Well, it was an interesting year for Insulet to say the least. The distributor acquisition was a surprise, but it really helped to juice the top line. Management seems very confident in their ability to continue to grow the top line this year by:

1) Next gen OmniPod launch should attract more patients
2) Cross selling current patients by using Neighborhood (the distributor) should add quite a bit to the top line towards end of year
3) Opening up more countries, and deeper penetration in Europe

If all of the above holds true, we should see cash flow break-even by year end.

I still think this company has a bright future. Integrated a CGM and adding new drugs for delivery are both HUGE potential growth opportunities. This company also still does not have reimbursement from Medicare/Medicaid, which again could juice results down the line.

Some good, some bad, but overall the thesis is on track. I'd rather own MAKO and ISRG, but PODD is a good speculation IMO.

Hit me with any questions.

Brian
SA/RB Welcome Fool
Long PODD
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