x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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|
04-3523891
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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|
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600 Technology Park Drive, Suite 200
Billerica, Massachusetts
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|
01821
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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|
|
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Item 1.
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Consolidated Financial Statements (Unaudited)
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|
June 30,
2015 |
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December 31,
2014 |
||||
(In thousands, except share and per share data)
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(Unaudited)
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|
|
||||
ASSETS
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
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$
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145,137
|
|
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$
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151,193
|
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Accounts receivable, net
|
31,826
|
|
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39,882
|
|
||
Inventories, net
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23,435
|
|
|
13,099
|
|
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Prepaid expenses and other current assets
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3,431
|
|
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4,022
|
|
||
Total current assets
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203,829
|
|
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208,196
|
|
||
Property and equipment, net
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42,040
|
|
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37,069
|
|
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Intangible assets, net
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12,301
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|
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14,064
|
|
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Goodwill
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37,536
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37,536
|
|
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Other assets
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4,687
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|
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5,291
|
|
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Total assets
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$
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300,393
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|
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$
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302,156
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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|
|
|
||||
Current Liabilities
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|
|
|
||||
Accounts payable
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$
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17,916
|
|
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$
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14,659
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Accrued expenses and other current liabilities
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26,443
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|
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24,703
|
|
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Deferred revenue
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2,088
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|
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1,554
|
|
||
Current portion of capital lease obligations
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6,235
|
|
|
3,380
|
|
||
Total current liabilities
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52,682
|
|
|
44,296
|
|
||
Capital lease obligations
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2,315
|
|
|
2,263
|
|
||
Long-term debt, net of discount
|
172,220
|
|
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168,994
|
|
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Other long-term liabilities
|
2,921
|
|
|
2,774
|
|
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Total liabilities
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230,138
|
|
|
218,327
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
||||
Stockholders’ Equity
|
|
|
|
||||
Preferred stock, $.001 par value:
|
|
|
|
||||
Authorized: 5,000,000 shares at June 30, 2015 and December 31, 2014.
Issued and outstanding: zero shares at June 30, 2015 and December 31, 2014.
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—
|
|
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—
|
|
||
Common stock, $.001 par value:
|
|
|
|
||||
Authorized: 100,000,000 shares at June 30, 2015 and December 31, 2014.
Issued and outstanding: 56,876,012 and 56,299,022 shares at June 30, 2015 and December 31, 2014, respectively. |
57
|
|
|
56
|
|
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Additional paid-in capital
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675,489
|
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661,798
|
|
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Accumulated deficit
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(605,291
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)
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(578,025
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)
|
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Total stockholders’ equity
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70,255
|
|
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83,829
|
|
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Total liabilities and stockholders’ equity
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$
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300,393
|
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$
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302,156
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|
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Three Months Ended June 30,
|
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Six Months Ended June 30,
|
||||||||||||
(In thousands, except share and per share data)
|
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2015
|
|
2014
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2015
|
|
2014
|
||||||||
Revenue
|
|
$
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75,588
|
|
|
$
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72,013
|
|
|
$
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136,803
|
|
|
$
|
141,174
|
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Cost of revenue
|
|
41,213
|
|
|
36,248
|
|
|
69,621
|
|
|
72,601
|
|
||||
Gross profit
|
|
34,375
|
|
|
35,765
|
|
|
67,182
|
|
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68,573
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Research and development
|
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12,069
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|
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6,677
|
|
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20,276
|
|
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13,456
|
|
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General and administrative
|
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12,856
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|
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19,512
|
|
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28,685
|
|
|
33,771
|
|
||||
Sales and marketing
|
|
21,811
|
|
|
14,856
|
|
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39,212
|
|
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28,512
|
|
||||
Total operating expenses
|
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46,736
|
|
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41,045
|
|
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88,173
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|
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75,739
|
|
||||
Operating loss
|
|
(12,361
|
)
|
|
(5,280
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)
|
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(20,991
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)
|
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(7,166
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)
|
||||
Interest income
|
|
41
|
|
|
29
|
|
|
77
|
|
|
60
|
|
||||
Interest expense
|
|
(3,075
|
)
|
|
(3,975
|
)
|
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(6,268
|
)
|
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(8,464
|
)
|
||||
Other income (expense), net
|
|
—
|
|
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(890
|
)
|
|
5
|
|
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(625
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Loss on extinguishment of long-term debt
|
|
—
|
|
|
(18,943
|
)
|
|
—
|
|
|
(18,943
|
)
|
||||
Interest and other expense, net
|
|
(3,034
|
)
|
|
(23,779
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)
|
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(6,186
|
)
|
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(27,972
|
)
|
||||
Loss before income taxes
|
|
(15,395
|
)
|
|
(29,059
|
)
|
|
(27,177
|
)
|
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(35,138
|
)
|
||||
Income tax expense
|
|
(37
|
)
|
|
(52
|
)
|
|
(89
|
)
|
|
(117
|
)
|
||||
Net loss
|
|
$
|
(15,432
|
)
|
|
$
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(29,111
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)
|
|
$
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(27,266
|
)
|
|
$
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(35,255
|
)
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Net loss per share basic and diluted
|
|
$
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(0.27
|
)
|
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$
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(0.53
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)
|
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$
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(0.48
|
)
|
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$
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(0.64
|
)
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Weighted-average number of shares used in calculating net loss per share
|
|
56,808,489
|
|
|
55,425,949
|
|
|
56,653,430
|
|
|
55,258,419
|
|
|
|
Six Months Ended June 30,
|
||||||
(In thousands)
|
|
2015
|
|
2014
|
||||
Cash flows from operating activities
|
|
|
|
|
||||
Net loss
|
|
$
|
(27,266
|
)
|
|
$
|
(35,255
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
||||
Depreciation and amortization
|
|
7,114
|
|
|
6,100
|
|
||
Non-cash interest and other expense
|
|
3,789
|
|
|
5,869
|
|
||
Stock-based compensation expense
|
|
9,630
|
|
|
8,577
|
|
||
Loss on extinguishment of debt
|
|
—
|
|
|
18,943
|
|
||
Provision for bad debts
|
|
1,180
|
|
|
1,804
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
6,876
|
|
|
(10,534
|
)
|
||
Inventories
|
|
(10,336
|
)
|
|
699
|
|
||
Deferred revenue
|
|
534
|
|
|
355
|
|
||
Prepaid expenses and other assets
|
|
632
|
|
|
(1,006
|
)
|
||
Accounts payable, accrued expenses and other current liabilities
|
|
4,997
|
|
|
4,361
|
|
||
Other long-term liabilities
|
|
147
|
|
|
(422
|
)
|
||
Net cash used in operating activities
|
|
(2,703
|
)
|
|
(509
|
)
|
||
Cash flows from investing activities
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(4,601
|
)
|
|
(5,745
|
)
|
||
Net cash used in investing activities
|
|
(4,601
|
)
|
|
(5,745
|
)
|
||
Cash flows from financing activities
|
|
|
|
|
||||
Principal payments of capital lease obligations
|
|
(2,814
|
)
|
|
(1,262
|
)
|
||
Proceeds from issuance of long-term debt, net of issuance costs
|
|
—
|
|
|
194,570
|
|
||
Repayment of long-term debt
|
|
—
|
|
|
(160,685
|
)
|
||
Proceeds from issuance of common stock, net of offering costs
|
|
6,489
|
|
|
5,339
|
|
||
Payment of withholding taxes in connection with vesting of restricted stock units
|
|
(2,427
|
)
|
|
(5,890
|
)
|
||
Net cash provided by financing activities
|
|
1,248
|
|
|
32,072
|
|
||
Net (decrease) increase in cash and cash equivalents
|
|
(6,056
|
)
|
|
25,818
|
|
||
Cash and cash equivalents, beginning of period
|
|
151,193
|
|
|
149,727
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
145,137
|
|
|
$
|
175,545
|
|
Non-cash investing and financing activities
|
|
|
|
|
||||
Allocation to equity for conversion feature for the 2% Notes
|
|
$
|
—
|
|
|
$
|
35,638
|
|
Purchases of property and equipment under capital lease
|
|
$
|
5,721
|
|
|
$
|
—
|
|
•
|
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 and rebates to customers are established as a reduction to revenue in the same period the related sales are recorded.
|
•
|
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.
|
|
Fair Value Measurements
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
June 30, 2015
|
|
|
|
|
|
|
|
||||||||
Cash Equivalents - Money Market Funds
|
$
|
108,177
|
|
|
$
|
108,177
|
|
|
$
|
—
|
|
|
$
|
—
|
|
December 31, 2014
|
|
|
|
|
|
|
|
||||||||
Cash Equivalents - Money Market Funds
|
$
|
123,141
|
|
|
$
|
123,141
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||||||||||
|
Carrying
Value
|
|
Estimated Fair
Value
|
|
Carrying
Value |
|
Estimated Fair
Value |
||||||||
2% Convertible Senior Notes
|
$
|
172,220
|
|
|
$
|
195,133
|
|
|
$
|
168,994
|
|
|
$
|
237,475
|
|
|
As of
|
||||||
|
June 30,
2015 |
|
December 31, 2014
|
||||
Principal amount of the 2% Convertible Senior Notes
|
$
|
201,250
|
|
|
$
|
201,250
|
|
Unamortized debt discount
|
(29,030
|
)
|
|
(32,256
|
)
|
||
Long-term debt, net of discount
|
$
|
172,220
|
|
|
$
|
168,994
|
|
Deferred financing costs
|
$
|
4,411
|
|
|
$
|
4,974
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Contractual coupon interest
|
$
|
1,006
|
|
|
$
|
1,273
|
|
|
$
|
2,012
|
|
|
$
|
2,621
|
|
Accretion of debt discount
|
1,625
|
|
|
2,258
|
|
|
3,226
|
|
|
4,883
|
|
||||
Amortization of debt issuance costs
|
281
|
|
|
192
|
|
|
563
|
|
|
338
|
|
||||
Loss on extinguishment of long-term debt
|
—
|
|
|
18,943
|
|
|
—
|
|
|
18,943
|
|
||||
Total interest and other expense
|
$
|
2,912
|
|
|
$
|
22,666
|
|
|
$
|
5,801
|
|
|
$
|
26,785
|
|
|
As of
|
||||||
|
June 30, 2015
|
|
December 31, 2014
|
||||
Manufacturing equipment
|
$
|
13,705
|
|
|
$
|
7,984
|
|
Less: Accumulated amortization
|
(3,012
|
)
|
|
(1,885
|
)
|
||
Total
|
$
|
10,693
|
|
|
$
|
6,099
|
|
Years Ending December 31,
|
Minimum Lease
Payments
|
||
2015 (remaining)
|
$
|
3,524
|
|
2016
|
5,639
|
|
|
2017
|
269
|
|
|
Total future minimum lease payments
|
$
|
9,432
|
|
Interest expense
|
(882
|
)
|
|
Total capital lease obligations
|
$
|
8,550
|
|
|
Three and Six Months Ended June 30,
|
||||
|
2015
|
|
2014
|
||
3.75% Convertible Senior Notes
|
—
|
|
|
1,100,811
|
|
2.00% Convertible Senior Notes
|
4,327,257
|
|
|
4,327,257
|
|
Unvested restricted stock units
|
948,554
|
|
|
968,083
|
|
Outstanding options
|
2,879,370
|
|
|
1,634,584
|
|
Total dilutive common shares
|
8,155,181
|
|
|
8,030,735
|
|
|
As of
|
||||||
June 30,
2015 |
|
December 31, 2014
|
|||||
Trade receivables
|
$
|
37,162
|
|
|
$
|
45,719
|
|
Allowance for doubtful accounts
|
(5,336
|
)
|
|
(5,837
|
)
|
||
Total accounts receivable
|
$
|
31,826
|
|
|
$
|
39,882
|
|
|
As of
|
||||||
June 30,
2015 |
|
December 31, 2014
|
|||||
Raw materials
|
$
|
1,465
|
|
|
$
|
853
|
|
Work-in-process
|
2,245
|
|
|
254
|
|
||
Finished goods, net
|
19,725
|
|
|
11,992
|
|
||
Total inventories
|
$
|
23,435
|
|
|
$
|
13,099
|
|
|
As of
|
||||||||||||||||||||||
June 30, 2015
|
|
December 31, 2014
|
|||||||||||||||||||||
|
Cost
|
|
Accumulated Amortization
|
|
Net Book Value
|
|
Cost
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||||||||
Customer relationships
|
$
|
30,100
|
|
|
$
|
(19,837
|
)
|
|
$
|
10,263
|
|
|
$
|
30,100
|
|
|
$
|
(18,167
|
)
|
|
$
|
11,933
|
|
Tradename
|
2,800
|
|
|
(762
|
)
|
|
2,038
|
|
|
2,800
|
|
|
(669
|
)
|
|
2,131
|
|
||||||
Total intangible assets
|
$
|
32,900
|
|
|
$
|
(20,599
|
)
|
|
$
|
12,301
|
|
|
$
|
32,900
|
|
|
$
|
(18,836
|
)
|
|
$
|
14,064
|
|
|
Amortization Expense
|
||||||||||
Years Ending December 31,
|
Customer Relationships
|
|
Tradename
|
|
Total
|
||||||
2015 (remaining)
|
$
|
1,394
|
|
|
$
|
94
|
|
|
$
|
1,488
|
|
2016
|
2,478
|
|
|
187
|
|
|
2,665
|
|
|||
2017
|
2,003
|
|
|
187
|
|
|
2,190
|
|
|||
2018
|
1,619
|
|
|
187
|
|
|
1,806
|
|
|||
2019
|
1,309
|
|
|
187
|
|
|
1,496
|
|
|||
Thereafter
|
1,460
|
|
|
1,196
|
|
|
2,656
|
|
|||
Total
|
$
|
10,263
|
|
|
$
|
2,038
|
|
|
$
|
12,301
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Balance at the beginning of the period
|
$
|
2,661
|
|
|
$
|
3,100
|
|
|
$
|
2,614
|
|
|
$
|
3,090
|
|
Warranty expense
(1)
|
1,254
|
|
|
(150
|
)
|
|
1,721
|
|
|
542
|
|
||||
Warranty claims settled
|
(748
|
)
|
|
(445
|
)
|
|
(1,168
|
)
|
|
(1,127
|
)
|
||||
Balance at the end of the period
|
$
|
3,167
|
|
|
$
|
2,505
|
|
|
$
|
3,167
|
|
|
$
|
2,505
|
|
|
|
|
|
|
(1)
|
Includes an additional reserve estimate of
$0.2 million
relating to the expected product replacement costs from the Company's voluntary recall of certain lots of OmniPods in response to the warning letter received from the U.S. Food and Drug Administration (FDA) for the three and six months ending June 30, 2015.
|
|
As of
|
||||||
|
June 30,
2015 |
|
December 31,
2014 |
||||
Composition of balance:
|
|
|
|
||||
Short-term
|
$
|
1,566
|
|
|
$
|
981
|
|
Long-term
|
1,601
|
|
|
1,633
|
|
||
|
$
|
3,167
|
|
|
$
|
2,614
|
|
Years Ending December 31,
|
Minimum Lease
Payments
|
||
2015 (remaining)
|
$
|
1,154
|
|
2016
|
2,290
|
|
|
2017
|
2,327
|
|
|
2018
|
2,308
|
|
|
2019
|
2,181
|
|
|
Thereafter
|
6,080
|
|
|
Total
|
$
|
16,340
|
|
|
Number of
Options (#)
|
|
Weighted Average
Exercise Price ($)
|
|
Aggregate
Intrinsic
Value ($)
|
|||||
|
|
|
|
|
(In thousands)
|
|||||
Balance, December 31, 2014
|
1,847,669
|
|
|
$
|
26.99
|
|
|
|
||
Granted
|
1,555,866
|
|
|
32.98
|
|
|
|
|||
Exercised
(1)
|
(398,745
|
)
|
|
15.62
|
|
|
$
|
7,922
|
|
|
Canceled
|
(125,420
|
)
|
|
30.16
|
|
|
|
|||
Balance, June 30, 2015
|
2,879,370
|
|
|
$
|
31.66
|
|
|
$
|
8,262
|
|
Vested, June 30, 2015
(2)
|
869,820
|
|
|
$
|
27.05
|
|
|
$
|
6,428
|
|
Vested and expected to vest, June 30, 2015
(2)(3)
|
2,589,255
|
|
|
|
|
$
|
8,039
|
|
|
|
|
|
|
(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, 2015
, and the exercise price of the underlying options.
|
(3)
|
Represents the number of vested options as of
June 30, 2015
, plus the number of unvested options expected to vest as of
June 30, 2015
, based on the unvested options outstanding at
June 30, 2015
, adjusted for the estimated forfeiture.
|
|
Number of
Shares (#)
|
|
Weighted
Average
Fair Value ($)
|
|||
Balance, December 31, 2014
|
746,612
|
|
|
$
|
31.40
|
|
Granted
|
635,781
|
|
|
32.55
|
|
|
Vested
|
(247,855
|
)
|
|
28.27
|
|
|
Forfeited
|
(185,984
|
)
|
|
32.67
|
|
|
Balance, June 30, 2015
|
948,554
|
|
|
$
|
32.73
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Current
|
$
|
16
|
|
|
$
|
22
|
|
|
$
|
40
|
|
|
$
|
53
|
|
Deferred
|
21
|
|
|
30
|
|
|
49
|
|
|
64
|
|
||||
Total
|
$
|
37
|
|
|
$
|
52
|
|
|
$
|
89
|
|
|
$
|
117
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
risks associated with our dependence on our principal product, the OmniPod System;
|
•
|
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 par
tners;
|
•
|
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;
|
•
|
failure of our contract manufacturers or component suppliers to comply with the FDA’s quality system regulations;
|
•
|
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 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;
|
•
|
fluctuations in quarterly results of operations;
|
•
|
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 limitations on our ability to use our net operating loss carryforwards; and
|
•
|
anti-takeover provisions in our organizational documents.
|
TABLE 1: RESULTS OF OPERATIONS
|
|||||||||||||||||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||
(In Thousands)
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
||||||||||||||
Revenue
|
$
|
75,588
|
|
|
$
|
72,013
|
|
|
$
|
3,575
|
|
|
5
|
%
|
|
$
|
136,803
|
|
|
$
|
141,174
|
|
|
$
|
(4,371
|
)
|
|
(3
|
)%
|
Cost of revenue
|
41,213
|
|
|
36,248
|
|
|
4,965
|
|
|
14
|
%
|
|
69,621
|
|
|
72,601
|
|
|
(2,980
|
)
|
|
(4
|
)%
|
||||||
Gross profit
|
34,375
|
|
|
35,765
|
|
|
(1,390
|
)
|
|
(4
|
)%
|
|
67,182
|
|
|
68,573
|
|
|
(1,391
|
)
|
|
(2
|
)%
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Research and development
|
12,069
|
|
|
6,677
|
|
|
5,392
|
|
|
81
|
%
|
|
20,276
|
|
|
13,456
|
|
|
6,820
|
|
|
51
|
%
|
||||||
General and administrative
|
12,856
|
|
|
19,512
|
|
|
(6,656
|
)
|
|
(34
|
)%
|
|
28,685
|
|
|
33,771
|
|
|
(5,086
|
)
|
|
(15
|
)%
|
||||||
Sales and marketing
|
21,811
|
|
|
14,856
|
|
|
6,955
|
|
|
47
|
%
|
|
39,212
|
|
|
28,512
|
|
|
10,700
|
|
|
38
|
%
|
||||||
Total operating expenses
|
46,736
|
|
|
41,045
|
|
|
5,691
|
|
|
14
|
%
|
|
88,173
|
|
|
75,739
|
|
|
12,434
|
|
|
16
|
%
|
||||||
Operating loss
|
(12,361
|
)
|
|
(5,280
|
)
|
|
7,081
|
|
|
134
|
%
|
|
(20,991
|
)
|
|
(7,166
|
)
|
|
13,825
|
|
|
193
|
%
|
||||||
Interest and other expense, net
|
(3,034
|
)
|
|
(23,779
|
)
|
|
(20,745
|
)
|
|
(87
|
)%
|
|
(6,186
|
)
|
|
(27,972
|
)
|
|
(21,786
|
)
|
|
(78
|
)%
|
||||||
Income tax expense
|
(37
|
)
|
|
(52
|
)
|
|
(15
|
)
|
|
(29
|
)%
|
|
(89
|
)
|
|
(117
|
)
|
|
(28
|
)
|
|
(24
|
)%
|
||||||
Net loss
|
$
|
(15,432
|
)
|
|
$
|
(29,111
|
)
|
|
$
|
(13,679
|
)
|
|
(47
|
)%
|
|
$
|
(27,266
|
)
|
|
$
|
(35,255
|
)
|
|
$
|
(7,989
|
)
|
|
(23
|
)%
|
|
|
As of
|
||||||
|
|
June 30,
2015 |
|
December 31, 2014
|
||||
Principal amount of the 2% Convertible Senior Notes
|
|
$
|
201,250
|
|
|
$
|
201,250
|
|
Unamortized debt discount
|
|
(29,030
|
)
|
|
(32,256
|
)
|
||
Long-term debt, net of discount
|
|
$
|
172,220
|
|
|
$
|
168,994
|
|
Deferred financing costs
|
|
$
|
4,411
|
|
|
$
|
4,974
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Contractual coupon interest
|
|
$
|
1,006
|
|
|
$
|
1,273
|
|
|
$
|
2,012
|
|
|
$
|
2,621
|
|
Accretion of debt discount
|
|
1,625
|
|
|
2,258
|
|
|
3,226
|
|
|
4,883
|
|
||||
Amortization of debt issuance costs
|
|
281
|
|
|
192
|
|
|
563
|
|
|
338
|
|
||||
Loss on extinguishment of long-term debt
|
|
—
|
|
|
18,943
|
|
|
—
|
|
|
18,943
|
|
||||
Total interest and other expense
|
|
$
|
2,912
|
|
|
$
|
22,666
|
|
|
$
|
5,801
|
|
|
$
|
26,785
|
|
Years Ending December 31,
|
Minimum Lease
Payments
|
||
2015 (remaining)
|
$
|
3,524
|
|
2016
|
5,639
|
|
|
2017
|
269
|
|
|
Total future minimum lease payments
|
$
|
9,432
|
|
Interest expense
|
(882
|
)
|
|
Total capital lease obligations
|
$
|
8,550
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Cash used in operating activities
|
|
$
|
(2,703
|
)
|
|
$
|
(509
|
)
|
Net loss
|
|
$
|
(27,266
|
)
|
|
$
|
(35,255
|
)
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Cash used in investing activities
|
|
$
|
(4,601
|
)
|
|
$
|
(5,745
|
)
|
Cash provided by financing activities
|
|
$
|
1,248
|
|
|
$
|
32,072
|
|
|
|
Payments Due in
|
||||||||||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
2015 (remaining)
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
Later
|
||||||||||||||
Operating lease obligations
|
|
$
|
16,340
|
|
|
$
|
1,154
|
|
|
$
|
2,290
|
|
|
$
|
2,327
|
|
|
$
|
2,308
|
|
|
$
|
2,181
|
|
|
$
|
6,080
|
|
Debt obligations
(1)
|
|
217,183
|
|
|
2,013
|
|
|
4,025
|
|
|
4,025
|
|
|
4,025
|
|
|
203,095
|
|
|
—
|
|
|||||||
Capital lease obligations
(2)
|
|
9,432
|
|
|
3,524
|
|
|
5,639
|
|
|
269
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total contractual obligations
|
|
$
|
242,955
|
|
|
$
|
6,691
|
|
|
$
|
11,954
|
|
|
$
|
6,621
|
|
|
$
|
6,333
|
|
|
$
|
205,276
|
|
|
$
|
6,080
|
|
|
|
|
|
|
(1)
|
The interest rate on the convertible debt is 2% per annum. We have included future payments of interest on the long-term debt in our obligations.
|
(2)
|
The effective interest rate on the capital lease obligations is 13-17%. We have included future payments of interest on the capital leases in our obligations.
|
|
INSULET CORPORATION
(Registrant)
|
|
|
Date: August 12, 2015
|
/s/ Patrick J. Sullivan
|
|
Patrick J. Sullivan
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
Date: August 12, 2015
|
/s/ Michael L. Levitz
|
|
Michael L. Levitz
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
|
INSULET COPRORATION
|
|
|
|
|
|
|
|
|
By: Patrick J. Sullivan
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
|
|
|
|
Optionee Name
|
|
|
Optionee Acceptance Date
|
|
|
|
|
|
INSULET COPRORATION
|
|
|
|
|
|
|
|
|
By: Patrick J. Sullivan
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
|
|
|
|
Grantee Name
|
|
|
Grantee Acceptance Date
|
|
|
|
Company Revenue for the Fiscal Year Ending December 31, 2015
|
Number of Restricted Stock Units
|
Less than $317,500,000
|
0
|
$317,500,000
|
50% of the Target Award (the “Threshold Award”)
|
$317,500,001 - $322,499,999
|
Percentage determined pursuant to Section 3(c) below
|
$322,500,000
|
100% of the Target Award
|
$322,500,001 - $327,499,999
|
Percentage determined pursuant to Section 3(c) below
|
$327,500,000 or more
|
125% of the Target Award
|
|
|
INSULET COPRORATION
|
|
|
|
|
|
|
|
|
By: Patrick J. Sullivan
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
|
|
|
|
Grantee Name
|
|
|
Grantee Acceptance Date
|
|
|
|
|
|
INSULET COPRORATION
|
|
|
|
|
|
|
|
|
By: Patrick J. Sullivan
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
|
|
|
|
Optionee Name
|
|
|
Optionee Acceptance Date
|
|
|
|
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:
|
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):
|
|
|
/s/ Patrick J. Sullivan
|
|
Patrick J. Sullivan
|
|
President and Chief Executive Officer
|
|
|
|
Date: August 12, 2015
|
|
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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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/s/ Michael L. Levitz
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Michael L. Levitz
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Chief Financial Officer
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Date: August 12, 2015
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/s/ Patrick J. Sullivan
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Patrick J. Sullivan
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President and Chief Executive Officer
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Date: August 12, 2015
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/s/ Michael L. Levitz
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Michael L. Levitz
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Chief Financial Officer
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Date: August 12, 2015
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