Third quarter 2009 revenue increased 85% to $18.7 million, compared to $10.1 million in the third quarter of 2008. On a sequential basis, revenue increased 28% from $14.6 million in the second quarter of 2009. Gross profit for the third quarter of 2009 was $5.8 million, representing a 31% gross margin, compared to a gross loss of $0.1 million, or a (1%) gross margin, for the third quarter of 2008. On a sequential basis, gross profit increased 83% from $3.2 million in the second quarter of 2009.

Operating loss for the third quarter of 2009 was $13.5 million, a 32% improvement compared to operating loss of $19.8 million in the third quarter of 2008. Total operating expenses were $19.3 million in the third quarter of 2009, compared to $19.7 million in the third quarter of 2008. Net loss for the third quarter of 2009 was $24.7 million, or $0.88 per share, compared to a net loss of $21.7 million, or $0.78 per share, for the third quarter of 2008.

"In the third quarter, we delivered record growth in referrals, impressive gross margin expansion and a significant reduction in operating losses, reflecting Insulet's continued focus on innovation, expansion and efficiency," said Duane DeSisto, President and Chief Executive Officer of Insulet. "This quarter marked the first anniversary of our national sales force, and I'm particularly pleased with the significant increase in sales productivity we've delivered over that short period of time. Our strong results clearly demonstrate that we are well positioned to continue driving adoption of the easy to use, tube-free OmniPod System, advancing our mission of improving the lives of people with diabetes."

Net interest expense was $11.2 million in the third quarter of 2009, compared to $1.8 million in the third quarter of 2008. The increase primarily relates to a one-time non-cash interest charge of $7.6 million for the remaining unamortized value of the warrants, transaction fee and deferred financing costs associated with the amendment of the Company's credit facility in September 2009.

For the nine months ended September 30, 2009, revenue increased 89% to $45.8 million from $24.2 million for the first nine months of 2008. Gross profit for the first nine months of 2009 was $11.0 million, representing a 24% gross margin, as compared to a gross loss of $5.8 million, or a (24%) gross margin, in the first nine months of 2008. Operating loss for the first nine months ended September 30, 2009 was $47.4 million, compared to an operating loss of $62.0 million in the first nine months ended September 30, 2008. Net interest expense was $17.2 million in the first nine months of 2009, compared to $3.6 million in the first nine months of 2008. The increase mainly reflects (i) $10.5 million in interest, approximately $8.7 million of which is non-cash related, on the Company's credit facility originally entered into in March 2009 and amended in September 2009; and (ii) $4.4 million in cash and non-cash interest related to the Company's 5.375% convertible notes issued in June 2008. Net loss for the first nine months of 2009 was $64.6 million, or $2.32 per share, compared to $65.6 million, or $2.38 per share, for the first nine months of 2008. As of September 30, 2009, the Company had cash and cash equivalents of $72.7 million compared to $56.7 million at December 31, 2008.

Recent Highlights

-- On September 25, 2009, the Company amended its $60 million credit
   facility with Deerfield Management Company, which was entered into
   in March 2009.  Under the terms of the amendment, Deerfield agreed
   to eliminate all future performance-related milestones associated
   with the remaining $32.5 million available for borrowing under the
   credit facility and reduce the annual interest rate on any borrowed
   funds to 8.5% from 9.75%. In addition, Deerfield agreed to forego
   the remaining warrants to purchase an additional 1.5 million shares
   of the Company's common stock that would have been issued upon
   future draws. Pursuant to the terms of the amendment, Insulet agreed
   to immediately draw down the remaining $32.5 million available on
   the credit facility upon the close of the transaction, which
   occurred on September 30, 2009. As a result of the amendment,
   Insulet expects to realize more than $12 million in cash and
   non-cash interest savings over the remaining three years of the
   credit facility.  The borrowed funds are repayable in September
   2012. In conjunction with the amendment, on September 25, 2009, the
   Company also entered into a securities purchase agreement with
   Deerfield.  Under the terms of this agreement, the Company sold
   2,855,659 shares of its common stock to Deerfield for $9.63 per
   share, for aggregate proceeds of $27.5 million.  These funds were
   then used to repay the $27.5 million of debt initially borrowed
   from Deerfield in March 2009.
-- The Boston Business Journal recognized Insulet as the second
   fastest-growing public company in Massachusetts.
-- In July, the Company introduced its Eco-Pod Program -- the
   industry's first program for environmentally safe disposal of
   insulin pump components -- which is intended to reduce the impact
   of used OmniPods on the environment.

Guidance

The Company is updating full year 2009 revenue guidance and now expects revenue for the full year 2009 to be in the range of $64 to $66 million, compared to previous guidance of $58 to $65 million.