# Insulet Corp: Form 10-Q for the period ended Mar 31, 2018

- Company: [Insulet Corp](/companies/podd.md) (CIK 1145197)
- Form: 10-Q
- Filed: 2018-05-04
- Accepted by EDGAR: May 3, 2018, 17:37 ET
- Period: 2018-03-31
- Accession: 0001145197-18-000008
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1145197/000114519718000008/podd-2018x03x31_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1145197/000114519718000008/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2018-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2018-01-01 to 2018-03-31 | $123.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2018-01-01 to 2018-03-31 | $47.8m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2018-01-01 to 2018-03-31 | $75.8m | us-gaap:GrossProfit |
| Research and development | 3 months, 2018-01-01 to 2018-03-31 | $19.9m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2018-01-01 to 2018-03-31 | $0 | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2018-01-01 to 2018-03-31 | $333.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2018-01-01 to 2018-03-31 | −$6.6m | us-gaap:NetIncomeLoss |
| Operating cash flow | 3 months, 2018-01-01 to 2018-03-31 | −$4.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2018-01-01 to 2018-03-31 | $35.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2018-01-01 to 2018-03-31 | $700.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2018-03-31 | $203.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2018-03-31 | $451.6m | us-gaap:AssetsCurrent |
| Total assets | at 2018-03-31 | $829.8m | us-gaap:Assets |
| Current liabilities | at 2018-03-31 | $82.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2018-03-31 | $659.2m | us-gaap:Liabilities |
| Long-term debt | at 2018-03-31 | $569.9m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2018-03-31 | $3.5m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2018-03-31 | $170.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 24,657 characters.

### FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. These statements are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition.

The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and other factors described in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 22, 2018 in the section entitled “Risk Factors" as updated by Item 1A "Risk Factors" herein, and in our other filings from time to time with the Securities and Exchange Commission. Accordingly, you should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. The forward-looking statements made in this quarterly report on Form 10-Q relate only to events as of the date of this report. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

### 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. There are two primary types of insulin therapy practiced today: MDI therapy using syringes or insulin pens; and pump therapy using insulin pumps. Insulin pumps are used to perform continuous subcutaneous insulin infusion, or insulin pump therapy, and typically use a programmable device and an infusion set to administer insulin into the person’s body. Insulin pump therapy has been shown to provide people with insulin-dependent diabetes with numerous advantages relative to MDI therapy. We estimate that approximately one-third of the Type 1 diabetes population in the United States use insulin pump therapy, and that less than 10% of the Type 2 diabetes population in the United States who are insulin-dependent use insulin pump therapy. 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. The Omnipod System, which features two discreet, easy-to-use devices that communicate wirelessly and provide for virtually pain-free automated cannula insertion and blood glucose meter integration, eliminates the need for traditional MDI therapy or the use of traditional pump and tubing. 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, as well as Canada and Israel.

In addition to the diabetes market space, we have partnered with pharmaceutical and biotechnology companies that utilize a customized form of the Omnipod System to deliver a drug over a specified interval of time, at a certain administered volume. The majority of our drug delivery revenue currently consists of sales to Amgen for its Neulasta Onpro kit.

We are constructing a highly-automated manufacturing facility in Acton, Massachusetts, with planned production out of the facility beginning in early 2019. The facility will also serve as our global headquarters. We expect that the new facility will allow us to lower our manufacturing costs, increase supply redundancy, add capacity closer to our largest customer base and support growth. We expect capital expenditures for the construction of the Acton facility and related equipment purchases will approach $200 million when production begins in 2019 and will be funded by our cash flows from operations and proceeds from our senior convertible debt offerings.

In 2017, we announced our plans to assume, on July 1, 2018, all commercial activities (including, among other things, distribution, sales, marketing, training and support) of our Omnipod System across Europe following the expiration of our distribution agreement with our European distributor on June 30, 2018. Once we assume commercial activities following the expiration of the current distribution agreement, we expect our revenue and gross margins to increase, as average customer pricing in Europe is higher than the current distributor pricing to our European distributor. Throughout 2018, we expect to incur increased operating expenses as we invest in our European operations. Once European operations are established, excluding nonrecurring transition-related costs, we expect that the assumption of direct distribution will be accretive to our consolidated results of operations.

In January 2018, we announced that the Centers for Medicare & Medicaid Services ("CMS") has issued guidance clarifying that Medicare Part D Plan Sponsors are permitted to provide coverage for products such as the Omnipod System under the Medicare Part

D (prescription drug) program. We have begun working with Medicare Part D carriers to ensure beneficiaries living with diabetes have access to the Omnipod System. Securing Medicare Part D coverage also provides us with a direct pathway to gain Medicaid coverage at the state level, as many state-run Medicaid programs follow CMS prescription drug guidance to determine coverage. This allows access for lower-income individuals and families on Medicaid for whom Omnipod currently is not a covered option. We estimate that obtaining Medicare and Medicaid coverage extends Omnipod System coverage access to approximately 450,000 additional individuals with Type 1 diabetes in the United States.

Also in January 2018, we submitted a premarket notification 510(k) to the U.S. Food and Drug Administration ("FDA") requesting clearance for commercial distribution of our DASH TM System, which is our next generation of the Omnipod System, featuring a secured Bluetooth Low Energy enabled Pod and PDM with a touch screen color user interface supported by smartphone connectivity. Upon clearance, we would begin a limited commercial release of the product prior to a full market launch.

#### First Quarter 2018 Revenue Results:

Total revenue of $123.6 million

- U.S. Omnipod revenue of $70.3 million
- International Omnipod revenue of $38.4 million
- Drug Delivery revenue of $14.9 million

Our long-term financial objective is to achieve and sustain profitable growth. We expect our efforts in 2018 and 2019 to focus primarily on the construction and commissioning of our U.S. manufacturing facility, the establishment of our European operations, the launch of new products, such as the DASH TM Omnipod System, continuing our product development efforts, and taking the necessary actions such as amending or creating payor or distributor contracts to allow us to service patients who receive benefits through the Medicare Part D and Medicaid programs. 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 the majority 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 subcutaneous delivery of 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. Commissions costs that are direct and incremental to obtaining a new customer are capitalized and amortized to sales and marketing expense over the expected period of benefit.

*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 three months ended March 31, 2018 compared to the same period of 2017, 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, 2018 | 2017 | Change $ | Change % |
| --- | ---: | ---: | ---: | ---: |
| U.S. Omnipod | **$70,272** | $59,655 | $10,617 | 18% |
| International Omnipod | **38,404** | 25,144 | 13,260 | 53% |
| Drug Delivery | **14,902** | 16,914 | (2,012) | (12)% |
| Total revenue | **123,578** | 101,713 | 21,865 | 21% |
| Cost of revenue | **47,763** | 42,315 | 5,448 | 13% |
| Gross profit | **75,815** | 59,398 | 16,417 | 28% |
| Gross margin | **61.4%** | 58.4% |  |  |
| Operating expenses: |  |  |  |  |
| Research and development | **19,912** | 17,500 | 2,412 | 14% |
| Sales and marketing | **32,133** | 28,095 | 4,038 | 14% |
| General and administrative | **23,770** | 19,111 | 4,659 | 24% |
| Total operating expenses | **75,815** | 64,706 | 11,109 | 17% |
| Operating income (loss) | **—** | (5,308) | 5,308 | (100)% |
| Interest expense and other, net | **6,236** | 4,573 | 1,663 | 36% |
| Loss before income taxes | **(6,236)** | (9,881) | 3,645 | (37)% |
| Income tax expense | **333** | 96 | 237 | 247% |
| Net loss | **$(6,569)** | $(9,977) | $3,408 | (34)% |

### Revenue

Our total revenue increased to $123.6 million, up $21.9 million, or 21%, in the first quarter of 2018 compared to the first quarter of 2017, due to continued growth in our U.S. Omnipod and International Omnipod revenue, partially offset by lower drug delivery revenue. Our U.S. Omnipod revenue increased to $70.3 million, up $10.6 million, or 18%, primarily due to growth in our Omnipod customer base as we continue to expand awareness of and access to the Omnipod System. Our International Omnipod revenue increased to $38.4 million, up $13.3 million, or 53%, primarily due to growth in distributor sales from continued adoption in existing European markets. Our drug delivery revenue decreased to $14.9 million, down $2.0 million, or 12%, due to fewer shipments to Amgen during the period. For the year ending December 31, 2018, we expect strong revenue growth driven by our expansion in the U.S. and internationally, as well as the transition to direct distribution of our Omnipod System across Europe following the expiration of our global distribution agreement with our European distributor on June 30, 2018, partially offset by lower drug delivery revenue.

### Cost of Revenue

Cost of revenue increased to $47.8 million, up $5.4 million, or 13%, in the first quarter of 2018 compared to the same period in 2017 reflecting an increase in sales volumes.

### Gross Margin

Gross margin increased to 61.4%, up 300 basis points in the first quarter of 2018 compared to the same period in 2017. The margin increase was primarily due to improvements in supply chain operations, partially offset by the unfavorable mix impact of higher distributor sales in Europe. For the year ending December 31, 2018, we expect gross margin to increase as compared to 2017 primarily due to improvements in supply chain operations and our assumption of distribution of our Omnipod System in Europe in the second half of 2018.

### Research and Development

Research and development expenses increased to $19.9 million, up $2.4 million, or 14%, for the three month period ended March 31, 2018 compared to the same period in 2017. The increase was primarily due to an increase in expenses related to our development projects, including our digital mobile Omnipod platform, which involves interaction with continuous glucose monitoring technology, our concentrated insulin program and our hybrid closed-loop control system program. For the year ending December 31, 2018, we expect overall research and development spending to increase as compared to 2017 due to the development efforts on our on-going projects.

### Sales and Marketing

Sales and marketing expenses increased to $32.1 million, up $4.0 million, or 14%, for the three month period ended March 31, 2018 compared to the same period in 2017. The increase in sales and marketing expenses was primarily attributable to investments to support our assumption in mid-2018 of direct commercial support for Omnipod in Europe, increased personnel-related expenses associated with the expansion of our customer support, market access and sales force personnel, and increased advertising expenses associated with direct to patient marketing activities. These increases were partially offset by incremental capitalized commission costs of $4.0 million related to the acquisition of new customer contracts, less quarterly amortization of previously capitalized costs of $1.6 million. This method of accounting for commission costs was adopted in the first quarter of 2018 with the adoption ASC 606. For the year ending December 31, 2018, we expect sales and marketing expense to increase as compared to 2017 due to the sales and marketing effort as described above, partially offset by the capitalization of commission costs under ASC 606.

### General and Administrative

General and administrative expenses increased to $23.8 million, up $4.7 million, or 24%, for the three month period ended March 31, 2018 compared to the same period in 2017. This increase was primarily attributable to increased personnel-related costs and fees related to external consultants and professional service providers to support the growth in our business. For 2018, we expect overall general and administrative expenses to increase as compared to 2017 as we continue to grow the business and make investments in our operating structure to support continued growth as well as the establishment of direct commercial operations in Europe.

### Interest Expense and Other, Net

Interest expense and other, net, increased to $6.2 million, up $1.7 million, or 36%, for the three month period ended March 31, 2018 compared to the same period in 2017. The increase is primarily due to the full quarterly effect of interest expense, including cash and non-cash interest, related to our 1.375% Notes, which were issued in November 2017, partially offset by a reduction in interest expense related to our 2% Notes, which were partially retired in 2017, and an increase in interest income on our investments in marketable securities.

### Liquidity and Capital Resources

As of March 31, 2018, we had $203.1 million in cash and cash equivalents and $313.0 million in investments in marketable securities. We believe that our current liquidity will be sufficient to meet our projected operating, investing 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 are constructing a highly-automated manufacturing facility in Acton, Massachusetts, with planned production out of the facility beginning in 2019. This facility will also serve as our global headquarters. As a result, capital expenditures have increased above historic levels to fund the construction of the Acton facility and related equipment purchases. As of March 31, 2018, investments in construction-in-progress related to the Acton facility were approximately $110 million. We expect that capital expenditures for this facility will approach $200 million when production begins in 2019.

In connection with our plans to assume, on July 1, 2018, all commercial activities of our Omnipod System across Europe following the expiration of our distribution agreement with our European distributor on June 30, 2018, we will be required to pay to the European distributor a per unit fee for sales of our Omnipod device over the subsequent twelve months following the expiration of the global distribution agreement. The fee will be based on our sales of the Omnipod device to identified customers (as that term is defined in the distribution agreement) of the European distributor who had previously entered into an agreement with the distributor for the purchase of Omnipod devices. While the actual total fee could vary significantly, we estimate that the total fee could be in the range of approximately $10 million to $55 million. The fee will be determined and paid on a quarterly basis following the expiration of the distribution agreement and the actual amount of the fee will depend on a number of factors and will not be known until the number of qualifying sales of Omnipod devices is determined following each quarter beginning with the quarter ending September 30, 2018.

### Convertible Debt

In order to finance our operations and global expansion, we have periodically issued and sold Convertible Senior Notes, which are convertible into our common stock. As of March 31, 2018, the following Notes were outstanding:

| Issuance Date | Coupon | Principal Outstanding (in thousands) | Due Date | Initial Conversion Rate per Share of Common Stock | Conversion Price per Share of Common Stock |
| --- | ---: | ---: | --- | ---: | ---: |
| June 2014 | 2.000% | $3,655 | June 15, 2019 | 21.5019 | $46.51 |
| September 2016 | 1.250% | 345,000 | September 15, 2021 | 17.1332 | $58.37 |
| November 2017 | 1.375% | 402,500 | November 15, 2024 | 10.7315 | $93.18 |
| Total |  | $751,155 |  |  |  |

We called the 2% Notes in March 2018 and settled the outstanding notes in May 2018. As of March 31, 2018, we had $3.5 million, net of discounts and issuance costs, on our balance sheet within accrued expenses and other current liabilities related to these notes. 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 provided by (used in): | Three Months Ended March 31, 2018 | 2017 |
| --- | ---: | ---: |
| Operating activities | **$(4,266)** | $(21,835) |
| Investing activities | **(55,988)** | (42,286) |
| Financing activities | **(8,870)** | 2,927 |
| Effect of exchange rate changes on cash | **(307)** | 58 |
| Net decrease in cash and cash equivalents | **$(69,431)** | $(61,136) |

#### Operating Activities

Our net cash used in operating activities for the three months ended March 31, 2018 was $4.3 million compared to net cash used in operating activities of $21.8 million in the same period of 2017, a decrease of $17.5 million. The decrease in cash used in operating activities in the current period is primarily due to favorable cash collections relative to the prior period, the timing of cash disbursements as well as improved operating results.

#### Investing Activities

Our net cash used in investing activities for the three months ended March 31, 2018 was $56.0 million compared to $42.3 million in the same period of 2017. Investing activities in the current period primarily consists of $35.4 million of capital expenditures, primarily associated with investments in our supply chain operations, which include approximately $29.0 million for facility and equipment in process of construction to support our U.S. manufacturing initiatives, and $20.6 million of investments in marketable securities, net of sales and maturities. Cash used in investing activities in the three months ended March 31, 2017 primarily related to net investments in marketable securities of $16.6 million and capital expenditures of $25.7 million.

#### Financing Activities

Our net cash used in financing activities for the three months ended March 31, 2018 was $8.9 million, which primarily includes $11.8 million of payments of withholding taxes in connection with the vesting of restricted stock units, partially offset by proceeds from the exercise of stock options of $3.0 million, as compared to net cash provided by financing activities of $2.9 million in the same period of 2017, which includes $6.3 million of proceeds from the exercise of stock options less $3.1 million for payment of amounts withheld for taxes related to the vesting of restricted stock units.

### Commitments and Contingencies

We lease our facilities in Massachusetts, California, Tennessee, the United Kingdom, Canada and China. These leases are accounted for as operating leases and 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 13 to the consolidated financial statements included in this Form 10-Q.

### Off-Balance Sheet Arrangements

As of March 31, 2018, 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, 2018. 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, 2017 other than our accounting policies related to revenue recognition and our policies related to the accounting for commissions expense as a result of the adoption of Accounting Standards Update No. 2014-09, *Revenue from Contracts with Customers,* which was adopted on January 1, 2018 as further described in Note 3 to the consolidated financial statements included in this Form 10-Q.

### Recent Accounting Pronouncements

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

## Market risk

As filed, 2,726 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 and long-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, 2018, we had outstanding debt related to our Convertible Senior Notes recorded on our consolidated balance sheet of $573.3 million, which includes a current portion of $3.5 million and a long-term portion of $569.9 million and is net of unamortized discount and issuance costs totaling $177.8 million. Change in the fair value of our outstanding debt, which could be impacted by changes in interest rates, are not recorded in these consolidated financial statements as the debt is accounted for at cost less unamortized discount and issuance costs. The fair value of the debt, which is disclosed in Note 4 to the consolidated financial statements, is also impacted by changes on our stock price.

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 operations in Canada and the United Kingdom. The majority of our sales outside of the U.S. are currently transacted in U.S. dollars and are not subject to material foreign currency fluctuations. However, we expect that following our assumption of direct commercial activities of our Omnipod System across Europe in July 2018 our revenue and expenditures, which will be primarily denominated in Euro, will be subject to additional foreign currency fluctuations. Fluctuations in foreign currency rates could affect our 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, 2018. 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, 2018, 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, 2018 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, 2017, 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, 2017.

Filed May 4, 2018.
Source: SEC EDGAR, the filing index for accession 0001145197-18-000008. Last ingested by Listed: Nov 4, 2026, 16:38 ET. No prices; not investment advice.