# Insulet Corp: Form 10-Q for the period ended Mar 31, 2017

- Company: [Insulet Corp](/companies/podd.md) (CIK 1145197)
- Form: 10-Q
- Filed: 2017-05-09
- Accepted by EDGAR: May 8, 2017, 17:32 ET
- Period: 2017-03-31
- Accession: 0001145197-17-000009
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/podd-2017x03x31_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2017-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Cost of revenue | 3 months, 2017-01-01 to 2017-03-31 | $42.3m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2017-01-01 to 2017-03-31 | $59.4m | us-gaap:GrossProfit |
| Research and development | 3 months, 2017-01-01 to 2017-03-31 | $17.5m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2017-01-01 to 2017-03-31 | −$5.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2017-01-01 to 2017-03-31 | $96.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2017-01-01 to 2017-03-31 | −$10.0m | us-gaap:NetIncomeLoss |
| Operating cash flow | 3 months, 2017-01-01 to 2017-03-31 | −$21.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2017-01-01 to 2017-03-31 | $25.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2017-03-31 | $76.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2017-03-31 | $337.2m | us-gaap:AssetsCurrent |
| Total assets | at 2017-03-31 | $445.0m | us-gaap:Assets |
| Current liabilities | at 2017-03-31 | $39.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2017-03-31 | $381.4m | us-gaap:Liabilities |
| Long-term debt | at 2017-03-31 | $336.8m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2017-03-31 | $63.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 24,583 characters.

### 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;
- 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 effectively manage the construction of our planned manufacturing facility in the U.S.;
- 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 and 1.25% Convertible Senior Notes due September 15, 2021;
- 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 28, 2017 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 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 addition to using the Omnipod System for insulin delivery, we also partner with global pharmaceutical and biotechnology companies to tailor the Omnipod System technology platform for the delivery of subcutaneous drugs across multiple therapeutic areas.

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 sale of Neighborhood Diabetes is provided in note 3 to the consolidated financial statements included in this Form 10-Q.

#### First quarter 2017 Revenue Results:

- Total revenue of $101.7 million
- U.S. Omnipod revenue of $59.7 million
- International Omnipod revenue of $25.1 million
- Drug Delivery revenue of $16.9 million

Our long-term financial objective is to achieve and sustain profitable growth. Our efforts in 2017 are primarily focused on the expansion of our customer base in the United States and internationally, increasing our gross profit and product development. Achieving these objectives is expected to require additional investments in certain personnel and initiatives, as well as enhancements to our supply chain operation capacity, efficiency and effectiveness. We believe that we will continue to incur net losses in the near term in order to achieve these objectives. However, we believe that 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 System 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, costs associated with promotional activities and participation in industry trade shows.

*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.

### Results of Operations

This section discusses our consolidated results of operations for the first quarter of 2017 compared to the first quarter of 2016, 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)*

*(in Thousands)*

| Revenue: | Three Months Ended March 31, 2017 | 2016 | Change $ | Change % |
| --- | ---: | ---: | ---: | ---: |
| U.S. Omnipod | **$59,655** | $50,712 | $8,943 | 18% |
| International Omnipod | **25,144** | 15,380 | 9,764 | 63% |
| Drug Delivery | **16,914** | 15,121 | 1,793 | 12% |
| Total Revenue | **101,713** | 81,213 | 20,500 | 25% |
| Cost of revenue | **42,315** | 37,162 | 5,153 | 14% |
| Gross profit | **59,398** | 44,051 | 15,347 | 35% |
| Gross margin | **58.4%** | 54.2% |  |  |
| Operating expenses: |  |  |  |  |
| Research and development | **17,500** | 12,989 | 4,511 | 35% |
| Sales and marketing | **28,095** | 24,022 | 4,073 | 17% |
| General and administrative | **19,111** | 14,739 | 4,372 | 30% |
| Total operating expenses | **64,706** | 51,750 | 12,956 | 25% |
| Operating loss | **(5,308)** | (7,699) | (2,391) | (31)% |
| Interest expense, net | **4,573** | 2,926 | (1,647) | (56)% |
| Loss from continuing operations before income taxes | **(9,881)** | (10,625) | (744) | (7)% |
| Income tax expense | **96** | 64 | 32 | 50% |
| Net loss from continuing operations | **(9,977)** | (10,689) | (712) | (7)% |
| Loss from discontinued operations, net of tax | **—** | (1,792) | (1,792) | (100)% |
| Net loss | **$(9,977)** | $(12,481) | $(2,504) | (20)% |

#### Revenue

Our total revenue increased to $101.7 million, up $20.5 million, or 25%, in the first quarter of 2017 compared to the first quarter of 2016, 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 to $59.7 million, up $8.9 million, or 18%, primarily due to growth in our installed base of Omnipod users as we continue to expand awareness of the Omnipod System. Our International Omnipod revenue increased to $25.1 million, up $9.8 million, or 63%, primarily due to growth in distributor sales from continued adoption in existing and newer markets such as France. Our drug delivery revenue increased to $16.9 million, up $1.8 million, or 12%, due to strong growth in demand for our primary drug delivery device on greater market adoption of Amgen's Neulasta Onpro kit.

For the year ending December 31, 2017, we expect strong revenue growth across all of our product lines as we continue our expansion in the U.S. and internationally.

#### Cost of Revenue

Cost of revenue increased to $42.3 million, up $5.2 million, or 14%, in the first quarter of 2017 compared to the same period in 2016, reflecting an increase in sales volumes, partially offset by improvements in supply chain operations.

#### Gross Margin

Gross margin increased to 58%, up approximately 4 points in the first quarter of 2017 compared to the same period in 2016. The margin increase was primarily due to improvements in supply chain operations.

For the year ending December 31, 2017, we expect gross margin to increase primarily due to improvements in supply chain operations.

#### Research and Development

Research and development expenses increased to $17.5 million, up $4.5 million, or 35%, for the three month period ended March 31, 2017 compared to the same period in 2016. The increase was primarily due to an increase in expenses related to our development projects, including our mobile application development which involves interaction with continuous glucose monitoring technology, artificial pancreas program and development efforts with Eli Lilly and Company for the use of concentrated insulin for patients with higher insulin-resistance and other Omnipod System product improvement initiatives.

For the year ending December 31, 2017, we expect overall research and development spending to increase due to the development efforts on our on-going projects described above.

#### Sales and Marketing

Sales and marketing expenses increased to $28.1 million, up $4.1 million, or 17%, for the three month period ended March 31, 2017 compared to the same period in 2016. This increase was primarily attributable to increased personnel-related expenses associated with the expansion of our customer support, market access and sales force personnel.

We expect sales and marketing expenses in the year ending December 31, 2017 to increase due to the expansion of our sales force, customer support and market access personnel.

#### General and Administrative

General and administrative expenses increased to $19.1 million, up $4.4 million, or 30%, for the three month period ended March 31, 2017 compared to the same period in 2016. This increase was primarily attributable to increased personnel-related costs and fees paid for external consultants to support the growth in our business.

For the year ending December 31, 2017, we expect overall general and administrative expenses to increase as we continue to grow the business and make investments in our operating structure to support this continued growth.

#### Interest Expense, Net

Interest expense, net increased to $4.6 million, up $1.6 million, or 56%, for the three month period ended March 31, 2017 compared to the same period in 2016. The increase is primarily due to additional interest expense, including cash and non-cash interest, associated with the issuance of the 1.25% Notes issued in September 2016. This was partially offset by lower interest expense associated with the repurchase of $134.2 million in principal of the 2% Notes in September 2016.

#### Income Tax Expense

For each of the three months ended March 31, 2017 and 2016, income tax expense was $0.1 million. Additional information regarding income tax expense is provided in note 14 to the consolidated financial statements.

#### Loss from Discontinued Operations, Net of Tax

The loss from discontinued operations was $1.8 million for the three months ended March 31, 2016. We sold the Neighborhood Diabetes business in February 2016.

### Liquidity and Capital Resources

As of March 31, 2017, we had $76.0 million in cash and cash equivalents and $178.0 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.

To lower our manufacturing costs, increase supply redundancy, add capacity closer to our largest customer base and support growth, we intend to construct a highly-automated manufacturing facility in the U.S., with planned production out of the facility beginning in 2019. We expect capital expenditures to increase above historic levels to fund the construction of the manufacturing facility and related equipment purchases. We believe that our current liquidity will be sufficient to meet our projected expenditures associated with this project.

#### Convertible Debt

In September 2016, we issued and sold $345.0 million in principal amount of 1.25% Convertible Senior Notes due September 2021 ("1.25% Notes"). The interest rate on the notes is 1.25% per annum, payable semi-annually in arrears in cash on March 15 and September 15 of each year. Interest began accruing on September 13, 2016; the first interest payment was paid in March 2017. The 1.25% Notes are convertible into our common stock at an initial conversion rate of 17.1332 shares of common stock per $1,000 principal amount of the 1.25% Notes, which is equivalent to a conversion price of approximately $58.37 per share, subject to adjustment under certain circumstances. The 1.25% Notes will be convertible prior to the close of business on the business day immediately preceding June 15, 2021 only under certain circumstances and during certain periods, and will be convertible on or after June 15, 2021 until the close of business on the second scheduled trading day immediately preceding September 15, 2021, regardless of those circumstances.

Cash interest expense related to the 1.25% Notes was $1.1 million in the three months ended March 31, 2017. Non-cash interest expense related to the 1.25% Notes of $3.3 million was comprised of the amortization of the debt discount and debt issuance costs in the three months ended March 31, 2017.

In June 2014, we issued and sold $201.3 million in principal amount of 2% Convertible Senior Notes due June 15, 2019 ("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.

In September 2016, in connection with the issuance of $345.0 million in principal amount of 1.25% Notes discussed above, we repurchased approximately $134.2 million in principal amount of the 2% Notes for $153.6 million. The $154.3 million paid to extinguish the debt was allocated to debt and equity based on their respective fair values immediately prior to the transaction. We allocated $121.4 million of the payment to the debt and $32.9 million to equity.

Cash interest expense related to the 2% Notes was $0.3 million and $1.0 million in the three months ended March 31, 2017 and 2016, respectively. Non-cash interest expense related to the 2% Notes of $0.7 million and $2.0 million was comprised of the amortization of the debt discount and debt issuance costs in the three months ended March 31, 2017 and 2016, respectively.

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

#### Summary of Cash Flows

*(In thousands)*

| Cash (used in) provided by: | Three Months Ended March 31, 2017 | 2016 |
| --- | ---: | ---: |
| Operating activities | **$(21,835)** | $(10,517) |
| Investing activities | **(42,286)** | 1,454 |
| Financing activities | **2,927** | (2,184) |
| Effect of exchange rate changes on cash | **58** | 210 |
| Net decrease in cash and cash equivalents | **$(61,136)** | $(11,037) |

#### Operating Activities

Our net cash used in operating activities for the three months ended March 31, 2017 was $21.8 million compared to net cash used in operating activities of $10.5 million in the same period of 2016. The increase was primarily due to timing of customer collections and vendor cash disbursements.

#### Investing Activities

Our net cash used in investing activities for the three months ended March 31, 2017 was $42.3 million compared to $1.5 million in net cash provided by investing activities in the same period of 2016. In the three months ended March 31, 2017, we invested $16.6 million into short-term investments (net of proceeds from redemptions and sales). There were no such investments in the same period of 2016. In addition, the increase in investing activities relates to higher capital purchases of $25.7 million for the three months ended March 31, 2017 compared to $3.2 million in the same period in 2016, primarily associated with investments in supply chain operations including approximately $18 million for equipment in process of construction to support our U.S. manufacturing initiatives.

#### Financing Activities

Our net cash provided by financing activities for the three months ended March 31, 2017 was $2.9 million compared to $2.2 million in net cash used in financing activities in the same period of 2016. The increase was primarily attributable to higher proceeds from the exercise of stock options in the period.

#### Commitments and Contingencies

We lease our facilities in Massachusetts, California, Tennessee, Canada and China. 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 consolidated balance sheets.

#### Legal Proceedings

The significant estimates and judgments related with establishing litigation reserves are discussed under "Legal Proceedings" in note 12 to the consolidated financial statements included in this Form 10-Q.

### Off-Balance Sheet Arrangements

As of March 31, 2017, 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 three months ended March 31, 2017. 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, 2016.

### 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.

## Market risk

As filed, 2,089 characters.

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, debt 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 short-term investments and 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 March 31, 2017, we had outstanding debt recorded on our consolidated balance sheet of $336.8 million, net of our deferred financing costs and unamortized debt discount totaling $75.3 million, related to our 2% and 1.25% Notes. As the interest rates are fixed, changes in interest rates do not affect the value of our debt.

*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.

## Controls and procedures

As filed, 2,030 characters.

### Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2017. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits 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. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2017, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

### Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 698 characters.

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, 2016, 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, 2016.

Filed May 9, 2017.
Source: SEC EDGAR, the filing index for accession 0001145197-17-000009. Last ingested by Listed: Nov 4, 2026, 16:38 ET. No prices; not investment advice.