Deborah R. Gordon - Insulet Corp. Patrick J. Sullivan - Insulet Corp. Michael L. Levitz - Insulet Corp. Shacey Petrovic - Insulet Corp.

David Ryan Lewis - Morgan Stanley & Co. LLC Ravi Misra - Berenberg Capital Markets LLC Anna Nussbaum - William Blair & Co. LLC Jeff D. Johnson - Robert W. Baird & Co., Inc. Danielle Antalffy - Leerink Partners LLC Joanne Karen Wuensch - BMO Capital Markets (United States) Christopher Pasquale - Guggenheim Securities LLC Robert J. Marcus - JPMorgan Securities LLC J. P. McKim - Piper Jaffray & Co. Ryan Blicker - Cowen & Co. LLC Jayson T. Bedford - Raymond James & Associates, Inc. Kyle William Rose - Canaccord Genuity, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Insulet Corporation Second Quarter of 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Deborah Gordon, Vice President, Investor Relations and Corporate Communications. Deborah R. Gordon - Insulet Corp.: Thank you, Nicole. Good afternoon, and thank you for joining for our second quarter 2018 earnings call. Joining me today are Patrick Sullivan, Chairman and Chief Executive Officer; Shacey Petrovic, President and Chief Operating Officer; and Michael Levitz, Senior Vice President and Chief Financial Officer. The replay of this call will be archived on our website and our press release discussing our second quarter 2018 results and third quarter and full-year guidance is also available in the IR section of our website. Before we begin, I would like to inform you that certain statements made by Insulet during the course of this call may be forward-looking and involve known and unknown risks and uncertainties that may cause actual results to be materially different from any future results implied by such statements. Such factors include those referenced in our Safe Harbor statement in our second quarter earnings release and in the company's filings with the SEC. Also, unless otherwise stated, all financial commentary regarding dollar and percentage changes will be on a year-over-year basis. With that, I'll turn the call over to Pat. Patrick J. Sullivan - Insulet Corp.: Thanks, Deb, and good afternoon, everyone. After my opening remarks, Mike will provide detail on our second quarter results and 2018 guidance. Shacey will then follow this up with this quarter's progress on key milestones, then we'll open the call for questions. We achieved second quarter revenue of $124.3 million, representing year-over-year growth of 13%, with U.S. Omnipod and Drug Delivery revenue exceeding expectations. We achieved another quarter of significant gross margin expansion to 66%, a 710 basis point improvement. We delivered positive operating income of $4.3 million and are on track to achieve positive operating income for the full year for the first time in Insulet's history. International Omnipod revenue was less than anticipated due to excess inventory in Europe when we transitioned from our distributor to direct operations on July 1. The impact of the excess inventory was confined to Q2 and Q3. Q4 will return to normal revenue run rate. When I joined Insulet nearly four years ago, I identified a transition to direct operations in Europe is a significant value inflection opportunity for the company with many benefits, specifically the ability to interact directly with the market, accelerate growth of the installed base, tailor our innovation pipeline to meet needs of the European market, expand our direct operations in other international markets, realized a 50% increase in our average European pricing and improve our gross margin by 400 basis points on an annual basis. Exiting this year, we will be in control of an international business of greater than $200 million in revenue with a lots and lots of room to grow. Going direct in Europe was a lot of work and a very big deal. On July 1, after two years of planning and one year of building our presence in Europe, we successfully met this very important objective. We are fully staffed with over 100 people on the ground and we've met all of our operational milestones leading up to and through the transition. We maintained 100% continuity of care for all Omnipod users across Europe, which of course was our number one priority. Since the stroke of midnight on July 1, our 24/7 customer care, distribution and logistics teams in Europe have been supporting customers, taking orders and shipping product across the continent. Our commercial teams have been calling on customers and onboarding new patients and these efforts are already having a very positive impact. For the month of July, international new patient starts and shipments were strong. In fact, new patient starts in our direct markets were notably higher than the historical run rate. Intermediaries within all of our markets have placed orders, reflecting strong end-user demand for Omnipod in a vibrant business. We are extremely confident in the strength of our European business based upon the valuable market insights we are gaining through our direct interactions with our European customers. I'd like to now provide you an update on some of our other key strategic initiatives. On our innovation roadmap, we achieved a second major milestone for the company this quarter. On June 5, we announced the FDA clearance of our Omnipod DASH System. DASH serves as the foundation of all exciting innovation pipeline, including concentrated insulins in HORIZON. DASH was a big hit at the American Diabetes Association meeting in June and we just entered limited market release last month. Turning to market access, we secured early access with two Medicare Part D Plan Sponsors: Express Scripts and Magellan, both of whom added Omnipod as a covered benefit at the start of the second quarter. These early wins are a great indicator that we will have broad coverage in 2019. We are also making great progress securing Medicare reimbursement with state plans. Based on the progress we're making with Medicare Part D sponsors and the early win with UnitedHealthcare, our U.S. new patient starts for the second quarter were the highest in the company's history. In manufacturing, we're making great strides in building our new state-of-the-art manufacturing facility and company headquarters in Massachusetts. We're on track to install our automated assembly equipment later this year and expect to begin production in early 2019. This facility will provide redundancy to our existing operations overseas, as well as additional capacity to support our rapid growth. Manufacturing in this facility will contribute to achieving our gross margin target of 70% in 2021. Before I hand the call over to Mike and Shacey, I'd like to reiterate that despite the single speed bump in Europe, the transition to direct operations last month was a tremendous success and business throughout Europe is strong. We are pleased with the growth of our Omnipod business and we are well on our way to achieve our 2021 goals of $1 billion in revenue, 70% gross margin and above-market profitability. With that, I'll turn it over to Mike. Michael? Michael L. Levitz - Insulet Corp.: Thank you, Pat. Our financial performance in the second quarter demonstrated double-digit revenue growth even after the higher than expected unfavorable impact of channel inventory as we transitioned from our former distributor in Europe. Our gross margins rose significantly, reaching 66% and we moved to positive EBIT this quarter. As a result, I am pleased to confirm that we are on track to achieve our target of full-year positive operating profit for the first time in Insulet's history. The fundamentals of our business are very strong and we will deliver significant growth throughout 2018, setting us up well for a great year of top and bottom-line growth in 2019. We are highly confident in achieving our long-term projections for both growth and profitability. Diving into the results. Total company revenue grew 13%, led by high growth in the United States, which was above the upper end of our guidance range, offset by lower than expected international revenue. In the U.S., we had another high growth quarter with Omnipod revenue up 19%, reaching $78.1 million due to our fast-growing customer base and early momentum from recent market access wins. Our International Omnipod grew 7%, totaling $28.5 million. The results were approximately $11 million lower than the midpoint of our guidance due to channel inventory in Europe, including a reduction in revenue of $7.4 million in the quarter for the repurchase of inventory from our former European distributor. Apart from the near-term impact of this channel inventory, our underlying business in Europe is very healthy with great momentum. And our Drug Delivery product line revenue was $17.7 million. That's roughly in line with last year. Turning to gross margin. This quarter, we continued to drive significant gross margin expansion reaching 66%, up 710 basis points. This was due to continued tremendous improvements in our manufacturing and supply chain operations, as well as favorable mix in the quarter on lower international distributor sales. As a result of the operational improvements and our successful transition to direct operations in Europe, which adds 400 basis points to our historic gross margin run rate, we now view 65% as our new base. We are, therefore, raising our full year 2018 expectations to 65%, a year-over-year increase of over 500 basis points. I'm also pleased to say that we are on track to achieve our longer term gross margin expansion objective of 70% in 2021. Moving down to P&L, our operating expenses totaled $77.7 million, up from $68 million, in line with our expectation. This included spending in Europe in line with our expected annual run rate of $45 million to $50 million. As a result of our revenue growth and gross margin expansion in the quarter, we delivered positive operating profit of $4.3 million. We ended the quarter with $456 million in cash and investments. That's down from $566 million at the end of last year due primarily to capital expenditures as we invest in U.S. manufacturing and supply chain operations in line with our plan. I will now update you on our 2018 outlook. For the full year, we expect total company revenue in the range of $547 million to $562 million. That's representing growth of 18% to 21%. This is compared to our previous expectation of $565 million to $580 million. On our product line level, we are raising the midpoint of our revenue guidance ranges for both our U.S. Omnipod and Drug Delivery product line and we are lowering our revenue expectations for International Omnipod due to the short-term impact of channel inventory in Europe. For U.S. Omnipod, we now expect a range of $320 million to $323 million, representing growth of 18% to 19%. This increase reflects our high confidence in the growth of our customer base, given recent market access wins and strong commercial momentum overall. For Drug Delivery, we are raising our expectations to a range of $64 million to $66 million. That represents decline of 9% to 11%. And for International Omnipod, we are revising our 2018 guidance range to $163 million to $173 million, representing growth of 36% to 44%, down from our previous expectation of $186 million to $194 million. This growth estimate reflects an uplift of approximately 50% from our historic distributor pricing in Europe, now that we are direct, offset in part by our inventory repurchase from our former distributor and the mid-year transition-related channel inventory. For the third quarter, we expect total company revenue of $144.5 million to $151.5 million. That's representing growth of 19% to 24%. This includes U.S. Omnipod of $82 million to $83 million, representing growth of 17% to 18%, International Omnipod of $45 million to $50 million, representing growth of 39% to 54%; and Drug Delivery of $17.5 million to $18.5 million, down 4% to 9%. You will notice the range we are providing for International Omnipod is a bit wider than usual and we encourage you to model closer to the midpoint of the range due to the near-term impact of channel inventory in Europe. Finally, we're excited to deliver operating profitability this year and we are reaffirming our expectation of full year 2018 operating margin in the low-single-digit percentage range. In summary, 2018 is on track to be another year of high growth and successful execution for Insulet. We continue to drive strong top line growth as well as significant gross margin expansion and positive operating income for the year. We also continue to deliver truly exceptional execution in all areas of our business and are highly confident about reaching our 2021 revenue and margin targets. We really are just getting started. I will now turn the call over to Shacey. Shacey Petrovic - Insulet Corp.: Thanks Mike. Across our business, our team continues to execute, achieve significant milestones and make great progress on our key strategic imperatives. Our Q2 international revenue results did not meet our expectations. However, like Pat and Mike, I am confident we have identified the source, have effectively solved for it and that the impact is short-term. I will start off with a brief overview of our customer base expectations. For U.S. Omnipod, we now expect a range of 18% to 20% customer base growth. For our international customer base, we are reaffirming expected growth of 20% to 25% and expect to be at the midpoint of this range. Despite the short-term inventory impact, our underlying European business is incredibly strong. Shortly, I'll share some great progress we've made and key learnings since our transition. First, I would like to expand upon what Pat discussed in his remarks. While we made every effort to ascertain how much inventory was at our distributor and in the European channel during the transition, as we advanced contract negotiations with our intermediaries, it became evident there was excess inventory in the field. Also, in June, our former distributor disclosed to us that its previous inventory reporting was inaccurate and understated. We decided to buy the excess inventory back from our former distributor in order to reduce confusion in the market and contain the financial impact. Our desire for better visibility into the European market was a prime reason for assuming all commercial operations in Europe. We are incredibly excited about the fundamental strength of our European business and the team's execution of this transition. And now that we have our own team in place running the business, we are much closer to our customers to better serve the market and grow the business much more effectively. Early indications have confirmed our view that there is tremendous opportunity for further penetration into our existing European markets to grow further across Europe and to expand into other global markets. We have had this business for just over 30 days and in that short period our fully staffed commercial team is gathering market insights, educating clinicians, negotiating with payors and training patients. We are providing clinician support and 24/7 product support in five languages. We have shipped to every market we serve, including our distributors, and every intermediary we are contracted with and to thousands of patients across our direct markets. We've established strong relationships with key opinion leaders and our EU regulatory bodies. And recently we announced our partnership with the International Diabetes Federation to support advocacy for improved diabetes care across Europe. Our European field team has already onboarded hundreds of new patients across all of our direct markets, a testament to the deep experience and great execution of our talented sales and clinical teams. I had the pleasure to be in our London office as well as in Lisbon with our Customer Care team during our official Insulet European kick off. The excitement and energy were contagious and I continue to be impressed by the passion and expertise of our team. I have no doubt we have the right team in place to drive tremendous long-term value. We have built a powerful infrastructure to support our significant growth trajectory and to drive success. And I look forward to sharing our accomplishments with you as the year progresses. Additionally, although our Canadian operations represent a smaller percentage of our international business, I would be remiss if I didn't mention just how well our team is executing to deliver strong commercial results and grow this area of our business. We are very pleased to have been selected as the preferred insulin pump for individuals with diabetes in the province of British Columbia. Now, an individual who meets the eligibility criteria will receive coverage for Omnipod. The province also eliminated the age restriction of 25 years or below and extended pump therapy reimbursement as a lifetime benefit for patients. We are ready and look forward to serving these patients that have been waiting for this change. This is yet another success story that supports the many benefits of Omnipod and the global acceptance and adoption of our differentiated technology. Moving on to our market access efforts, in the United States, we continue to make terrific headway. As Pat mentioned, our recent UnitedHealthcare, Express Scripts and Magellan wins have strengthened our outlook and long-term growth trajectory. They also represent important wins for the current and future Omnipod users covered by these plans. We are already realizing the positive impact from the UnitedHealthcare coverage that went into effect on April 1, and we expect this momentum to accelerate into 2019. We are also working closely with the Medicare Part D Plan Sponsors so that Omnipod will be included on their formulary benefits for 2019 and we will have greater insight on our Q3 call about Medicare coverage and timing. And this past quarter, we further strengthened our Medicaid coverage position by adding 4.5 million covered lives for Omnipod, bringing our total to approximately 30 million Medicaid covered lives. While we've made great headway here, we expect Medicaid access to continue to grow throughout this year and into 2019. Moving on to our innovation efforts, we are thrilled to have received FDA clearance for DASH in June. We had a great unveiling at ADA where DASH was very well received and the feedback from healthcare providers was overwhelmingly positive. At our booth, individuals had a hands-on experience with DASH and our Omnipod DISPLAY and Omnipod VIEW mobile apps were a big hit. As a reminder, the DISPLAY app allows users to see data on their smartphones, while the VIEW app allows caregivers to remotely view the data of their loved ones. Customer response was incredibly enthusiastic, particularly for the new features enabled by DASH's Bluetooth communication, such as the ability for a user to have an integrated view of their Dexcom CGM and Omnipod data on their iPhone. In addition, we had our largest clinical presence to date at ADA with nine presentations, including Omnipod use in Germany and Austria, our U-500, Omnipod data with Lilly and Omnipod Horizon Automated Glucose Control System data. For the second year in a row, our Omnipod Horizon data was highlighted by ADA for its overall excellence. We continue to make development progress on Horizon and are in the second half of our third IDE clinical development study, learning a lot about the system performance in two- to six-year olds in free-living conditions. We expect this study will wrap up in September and we will either head into a pre-pivotal or into a final IDE. Last month, we entered into the limited market release for DASH. We now have our first round of new users on DASH and are receiving great feedback on the performance of the system. Customers are highlighting the intuitive touch screen interface of the system and its unparalleled ease of use. We will scale usage and work to establish market access for DASH over the next two quarters and expect to move into full market release in early 2019. DASH is not just an exciting new technology platform, but also a unique opportunity for us to improve the customer experience through the pharmacy. A percentage of our business goes through this channel today and it provides a faster turnaround, reduced documentation burden for both clinics and patients and the potential for better patient economics and more convenience. Thanks to CMS's Part D designation, Omnipod is very well positioned for the pharmacy channel. By removing the upfront cost of the PDM and focusing our Market Access team on pharmacy during the limited market release, we will increase DASH access in this channel. Launching with a no-cost PDM and potential for pharmacy access with just an e-prescription significantly reduces barriers for adoption of Omnipod and is designed to enable more people to benefit from our remarkable technology. Payors are responding well to this pay-as-you-go business model. And in just a few short weeks, we have secured meaningful coverage for DASH. In summary, we are pleased to have moved through a largely successful transition of our European operations this quarter and are proceeding full steam ahead with capturing the newly expanded opportunities in our international business. We continue to make tremendous progress advancing our innovation pipeline and market access efforts. I have great confidence in Insulet's ability to achieve long-term growth and value creation. With that, operator, let's open the call for questions.

Thank you. Our first question from the line of David Lewis of Morgan Stanley. Your line is now open. David Ryan Lewis - Morgan Stanley & Co. LLC: Good afternoon. Guys, I'm going to blow my two questions here on the ex-U.S. business. So, Shacey, I think your description of what's happened ex-U.S. I think it's pretty clear, I think, but people want to get a better sense of. As you can get through this inventory burden, can you or Mike size the state of the burden and what your confidence is that you can get back there by the fourth quarter? And I had a quick follow-up as well on ex-U.S. Shacey Petrovic - Insulet Corp.: Okay. Sure. Yeah. So we estimate that there are approximately seven to eight weeks of inventory in the channel, which is spread over Q2 and Q3. That's about four to five weeks in Q2 and approximately two to three weeks in Q3. And so, that was about an $11 million impact in Q2 and we expect also an $11 million impact in Q3. In terms of how confident we are in those numbers, we are very confident in those numbers. I think over the last 30 days we're seeing exactly why we took this business over. We're getting just a different level of insight into the market. We have now interacted with all of our intermediaries, all of our patients and clinicians and we just have been able to validate customer base information, utilization rates all of this insight. So we feel very confident that by Q4 we're back to our normalized run rate. David Ryan Lewis - Morgan Stanley & Co. LLC: Okay. And then, my follow-up then for Mike. And Mike, I apologize if I'm doing the math wrong in your guidance implied. But it feels like the ex-U.S. guidance range in the third quarter and the fourth quarter are pretty similar. And just given what Shacey said about the drawdown in the second and third, I would expect somewhat of a bigger recovery in the fourth quarter, ex-U.S., if the demand signals were there. Am I doing the math wrong? And maybe you can just help us understand how third and fourth can be sort of flattish if you work through the inventory and do better in the fourth? Thanks so much. Michael L. Levitz - Insulet Corp.: Sure. So, just to clarify, so the fourth quarter is definitely higher than the third. I think if you're referring to being flat, the range is a $5 million range for the third quarter and implies a $5 million range for the fourth. But we definitely see there being higher growth in the fourth quarter and the high end of the range more reflective of the underlying business. I think it's fair to say, as I mentioned previously, that we have given a wider range in the third quarter because we do expect to work through the remaining excess inventory in the third quarter. Generally speaking, at this time of year, we would have a wider range in the fourth quarter than we would give when we finish the Q3 call. So there's – I wouldn't read anything into the wider range on the fourth quarter. I think it's fair to say this is not a small transition. And given the quarter we just completed, we just want to be very thoughtful in the guidance. I think what's important to note is what the fourth quarter guidance implies is a north of $50 million a quarter run rate, $200 million-plus international business. And that's what we were trying to convey with the guidance is really just that we do see this being a very strong business, in line with our expectation. Patrick J. Sullivan - Insulet Corp.: And higher profitability. David Ryan Lewis - Morgan Stanley & Co. LLC: Thanks, Pat. So definitely a higher probability. So the last quick follow-up there was, can you just give us a general sense of when you say fourth quarter full recovery, do you think the fourth quarter then reflects the rate of growth, for example, we could expect into 2019 or should we still expect acceleration from that level as you move into 2019? And I'll jump back in queue. Thanks so much. Shacey Petrovic - Insulet Corp.: I would expect acceleration from the Q4 level. What's so exciting about this is now we've got 115 people in Europe. Our commercial organization is exclusively focused on Omnipod. So I think our guidance is broad, as Mike noted, because of the transition and just the noise in the year. But as we continue through Q4 and then looking beyond, we expect the business to continue to grow at an accelerated rate from Q4.

Thank you. Our next question comes from the line of Ravi Misra of Berenberg Capital. Your line is now open. Ravi Misra - Berenberg Capital Markets LLC: Hi, good afternoon. Thank you for taking the questions. Can you hear me? Shacey Petrovic - Insulet Corp.: Yeah. Ravi Misra - Berenberg Capital Markets LLC: Hi. Great. So just wanted to push back the first question on the gross margin. If you could help us understand on that 700 basis points, how much of that was kind of tied to mix shift and how much of that was the underlying kind of improvement in the business? And then, my follow-up is around that – again, the international business. How should we think about kind of new patients versus churn? I mean, it seems like you have more control over the channel there now going direct. But is there some sort of turnover that we should be kind of factoring into our forecasts when we look at the patient adds there? Thank you. Michael L. Levitz - Insulet Corp.: This is Mike. I'll take the gross margin question and... Shacey Petrovic - Insulet Corp.: Sure. Michael L. Levitz - Insulet Corp.: ... then I'll turn it over to Shacey. In terms of the breakdown of the significant improvement we had in the second quarter, approximately 3 points of that was the favorable mix with a much lower international business. What's implied and what I described in my earlier comments is we do expect that we have now reached a threshold where 65% is now our base. And so, while we were helped in the quarter by the favorable mix, as we go and looking forward at the trend, we now are direct in Europe, we now are realizing the 50% uplift in pricing, not to end users but our capturing of what was instead going to our intermediary. And so, that's why we believe that 65% is what we expect for the remainder of the year and as our base. Shacey Petrovic - Insulet Corp.: And, Ravi, to your question about new patients and churn, actually, the attrition rate in Europe is much lower than it is in the U.S. So it's approximately 3% to 4%. And we have no indication that that has increased with this transition. In fact, we are very confident that we've transitioned approximately 60,000 patients, and that – as Pat said, that we provided 100% of continuity of care for the patients in this transition.

Thank you. Our next question comes from the line of Margaret Kaczor of William Blair. Your line is now open. Anna Nussbaum - William Blair & Co. LLC: Hi, guys. This is Anna in for Margaret. And I just wanted to transition to DASH a little bit and just ask what your initial feedback from patients is on DASH and from payors and what kind of data do you need or hurdles do you have to push those reimbursement contracts with the pharmacies? Thanks. Shacey Petrovic - Insulet Corp.: Sure. Thanks, Anna, for the question. So the feedback so far has been terrific. It's really been designed as a consumer device, but one piece of feedback that we got from one of the users, which I thought was great, is that it took her 4 minutes to kind of learn the system and prime a POD, which is pretty extraordinary and just goes to how intuitive the system is and that it was designed like a cell phone as on a cell phone platform. And so, people are really impressed with just the easy-to-use platform. In terms of payors, it's not really a data issue. We're getting a lot of great feedback from payors as we work to establish DASH pricing, which is primarily in the pharmacy channel. It's been tied to the change in the business model. So this is eliminating the PDM pricing and then moving forward kind of moving that into the PODD pricing. And so that's been the change that's been occurring and payors are responding very well to it. It's just a sort of further enhancing the advantage that Omnipod already has over these other systems where payors are plunking down a ton of money and then keeping their fingers crossed and hoping that people stay on the product and get the benefit. So we've just eliminated that hurdle for payors and that has been very positively received by the payors that we are currently in discussions with.

Thank you. Our next question comes from the line of Jeff Johnson of Robert W. Baird. Your line is now open. Jeff D. Johnson - Robert W. Baird & Co., Inc.: Thank you. Good afternoon, guys. So let me start first I guess on international. I'm sure we're all going to have some questions. But, Mike, I just want to push a little harder on that fourth quarter number. Even around $50 million, I think you talked about in the fourth quarter and I know there's a range there, but that's somewhere in the neighborhood of 30%, 35% year-over-year growth. With the 50% price uplift, it seems like simple math would suggest there's been a reduction in the core revenue ex the price list. Am I missing something there? Can you just help me kind of connect all those dots, please? Michael L. Levitz - Insulet Corp.: Sure absolutely. So what I guided to for the third quarter is $45 million to $50 million. And given the range for the full year, that would imply that the fourth quarter is between $51 million and $56 million. So probably above $50 million as I described. So what we've built in there is a wider range, as I said, than you would on a one-quarter basis, but again we're only halfway through the year. So if you look at the upper end of our range, which we believe is more indicative of the underlying business for the fourth quarter, there really isn't a change in direction. If you talk about 50% uplift in pricing, this is north of that. And as we said, our initial focus is on continuity of care and we've also said that new patient starts, generally speaking, are not a big driver in any given quarter of our revenue and it really changes the slope of the line. So we have an excellent team in Europe. They have hit the ground running and the trajectory is strong. And so, you shouldn't infer anything other than that from this guidance. Jeff D. Johnson - Robert W. Baird & Co., Inc.: All right. That's helpful. And I was doing some math during the call. So I apologize, Shacey if I missed this, but did you give any update on Horizon pre-pivotal or pivotal timing and just kind of launch expectations? If I missed it, I'm sorry. Shacey Petrovic - Insulet Corp.: No, that's okay. So what I said was that we expect to wrap up this IDE in September. We'll then take that data and share that with the FDA and then make a decision whether or not we move into either a final IDE or into pre-pivotal. So we'll have that clarity on the next call for certain. Jeff D. Johnson - Robert W. Baird & Co., Inc.: Expectations, if you had to put them right now for when Horizon might see in the U.S. a launch, any updated thoughts there? Shacey Petrovic - Insulet Corp.: Yeah, I think if we head into pre-pivotal, there is still a path for end of 2019, early 2020. If not, it may add a few months to the timeframe and we'll be able to give a lot more clarity on our next call for that one. We have been meeting with the FDA. We've been discussing the iCGM pathway with the FDA and with Dexcom, which also is a factor that could be a tailwind for that. So we just want to get all of those questions answered before we give any further guidance to all of you guys. But that should all be done by the next call. Jeff D. Johnson - Robert W. Baird & Co., Inc.: Understood. Thank you. Shacey Petrovic - Insulet Corp.: Yeah.

Thank you. Our next question comes from Danielle Antalffy of Leerink Partners. Your line is now open. Danielle Antalffy - Leerink Partners LLC: Hey, guys. Thanks so much for taking the question. Shacey, I'm going to ask a high level question. I was wondering if you could comment on the diabetes device market overall. It felt like at ADA, there was a lot of excitement around diabetes devices, not just PDM, but also insulin pump and it's a drastic difference or change from ADA 10 years ago. And I'm asking the question because you've now seen several reports this quarter. Dexcom yesterday on the CGM site (00:35:26) your U.S. numbers are very strong. Do you feel like we're at an inflection point for diabetes devices overall? And what that could mean for pump penetration? Where you think pump penetration is today? Where it could go over the next year few years? How quickly it could ramp? Thanks so much. Sorry, I know that was a lot. Shacey Petrovic - Insulet Corp.: No problem, Danielle. Yeah, so I agree that there's been a tremendous sort of buzz and two things at least are driving that. I think the first is CGM adoption. So as I've always said, for us CGM adoption is a great thing because as people get more visibility to their glucose trends, they typically want tools to help them control that and Omnipod is a great tool for that. So obviously, as we see more CGM adoption, we also see more Omnipod adoption. The other thing that's driving that really is the FDA's responsiveness to both the patient communities, to industry and to the clinical communities that are really driving interoperability and these Automated Glucose Control Systems to market by giving pathways like the iCGM and iPump pathways. So I think all of that really bodes well and we applaud the FDA's innovation on that front. And I think that we already were predicting that the pump market could grow at a CAGR of somewhere around 8% to 9% over the next five years. I think you can see that increase as a result of really these terrific trends with CGM. And you know what; it's actually showing in our numbers too. Pat referenced the fact that this quarter we had a record new patients start record growth rate as well. And so, certainly we're seeing that tailwind and momentum in our business. Danielle Antalffy - Leerink Partners LLC: Okay. Great. And just one quick follow-up as we shift to the type 2 opportunity, and I think you guys have said in the past that around 13% of your existing installed base is type 2. Correct me if I'm wrong there. But have you guys come up with a type 2 go-to-market strategy? I think we're relatively close to the first product launch, if I'm remembering correctly. So any color there and how that could be additive to numbers in 2019 and beyond? Thanks so much. Shacey Petrovic - Insulet Corp.: Sure. Yeah. So I think you're right, Danielle, about 13% of our U.S. business is type 2. And, frankly, we believe we have the best type 2 pump available today because of its ease of use and certain features that are really well received by the type 2 community. And then, of course, things like improvements in user interfaces that are geared towards the type 2 patient, which come with our U-500 and U-200 products with Lilly, will also help accelerate that. And so, I believe that we're going to see growth in that segment of our population over the next few years as those products come to market. And in fact, the growth in that segment has kept up with the growth in the rest of the segment. So we're seeing that continue to grow, which is great.

Thank you. Our next question comes from the line of Joanne Wuensch of BMO Capital Markets. Your line is now open. Joanne Karen Wuensch - BMO Capital Markets (United States): Good afternoon, everybody. Two questions. We haven't spent any time on drug delivery. Could you give us an update on what you're seeing there? And if you'd like to comment on any contract negotiations or anything that would be awesome. Shacey Petrovic - Insulet Corp.: Sure. I'll give you an update. Obviously, the partnership with Amgen remains strong and we were really excited to see their reporting that the on-body injector now represents 63% of all U.S. Neulasta doses. So just really strong adoption there. There's nothing really new to report on the drug delivery front. We continue discussions and exploratory work and as we have always said, that remains confidential. And so much of what we're discussing is really early stage in nature. And so, as we think about our 2021 goals, for example, what we've always said is that we don't really need another Amgen to achieve those. We see this really as a much longer term contributor. Joanne Karen Wuensch - BMO Capital Markets (United States): Thank you. And as a follow-up question, it seems to me that – as a follow-up to Danielle and your commentary that we're in that trifecta area where you have the FDA working, new products being approved, but also the reimbursement side. And can you just give us an update, a little bit on UnitedHealthcare and possibly any other insurers that you may be talking with? Thank you. Shacey Petrovic - Insulet Corp.: Sure. So the growth associated with the UnitedHealthcare access has been extraordinary. It's really helping to drive new patient adoption and that took us to a great level in terms of commercial reimbursement for Omnipod. So we have virtually 94% or 95% of commercially covered lives that have access to Omnipod now, which is a great place to be. And I think you're right. In addition to the FDA propelling innovation, it's great to see payors really making these innovations available to their patients. And so, that's so true. Because we have broad commercial coverage, our focus has really started to be in the pharmacy channel in terms of expanding coverage for DASH there. We see that as a great opportunity to provide competitive differentiation, a better customer experience, and for us a lower cost channel to serve. So that's where we're focused really over the next six months. And then, of course, on the pull through for Medicaid and Medicare and that is all going very well as well. Joanne Karen Wuensch - BMO Capital Markets (United States): Thank you.

Thank you. Our next question comes from the line of Chris Pasquale of Guggenheim. Your line is now open. Christopher Pasquale - Guggenheim Securities LLC: Thanks. The increase in your U.S. installed base growth expectation is certainly very encouraging, especially since we've yet to see the full impact from DASH and some of the more recent market access wins. Just talk about the dynamics there and what's going better than you might have expected at the start of the year? Shacey Petrovic - Insulet Corp.: Sure. Really that increase in installed base is driven primarily by the market access wins. So United went into effect April 1. That has certainly propelled new patient starts and then we have some early Medicare wins as well. And I think we're also benefiting from just more awareness and then reduction of barriers in physicians' offices. There were physicians who may have had good commercial coverage, but without Medicare or Medicaid, they were less willing to offer the product. But now that we have those things either there or thereabouts, much more willing to offer the product more broadly to their patient population. So that's been really working in our favor. We did have a little bit of mix working against us quarter in the U.S. business. And so, that sort of is why the revenue base doesn't line right up with the installed base growth. But I think that's all good because it's coming from an increase in market access, which will really drive volume growth and revenue growth as we look out over the horizon. Christopher Pasquale - Guggenheim Securities LLC: Thanks. And then just one on the European business. The third quarter guidance, does that assume additional inventory repurchases or is that piece done and the $11 million impact in 3Q is really just slower underlying business trends as you absorb that excess channel inventory? Shacey Petrovic - Insulet Corp.: Right. So the repurchase is done. What is implied in the Q3 growth is just the inventory that was existing within our intermediaries that our former distributor had sold into in excess before the transition. So we'll work through that in Q3 and be back to the normalized run rate in Q4. Christopher Pasquale - Guggenheim Securities LLC: Thanks.

Thank you. Our next question comes from the line of Robbie Marcus of JPMorgan. Your line is now open. Robert J. Marcus - JPMorgan Securities LLC: Great. Thanks for taking my question. Maybe just to follow up on Chris' question. After there was a quarter couple of years ago where inventory built up in the channel in Europe. I know you guys put in really good controls. What happened that you didn't know how much inventory was in the channel and when did you realize that occurred? Shacey Petrovic - Insulet Corp.: Sure, Robbie. So if you think about what this is, so seven to eight weeks of inventory. It's probably likely that it was built over some extended period of time. So to put it in perspective, it's about a day a week for every week last year of excess inventory. And the reason why we perhaps did not eliminate all of that activity was because the business was growing so quickly. So it's rapid growth. We had France exploding and we wanted to make sure that no customer went without product. And so, it's not really an exact science. We had great oversights in place. We didn't ship, actually, all orders to our former distributor in both Q1 and Q2. So we had great oversight for the last six months. But I think ultimately because of how fast growing the market was, we had this a little bit of excess. I think the good news is the team reacted very quickly. We mitigated it and contained it to Q2 and Q3 and ultimately, the underlying business is very, very strong. Michael L. Levitz - Insulet Corp.: Yeah. This is Mike. I would just remind what Shacey mentioned earlier, which is in June was when we had been informed by our former distributor that the information they'd given us before on inventories was inaccurate. Shacey Petrovic - Insulet Corp.: Yeah. Michael L. Levitz - Insulet Corp.: So in answer to your question about the timing. Robert J. Marcus - JPMorgan Securities LLC: Okay, great. And then, just two very quick follow-ups. One, do you know at this point what the size of the payment you'll owe to Ypsomed is? They've been saying somewhere in the $50 million ballpark. And can you remind us of the timeframe for the U-200 product? Thanks. Michael L. Levitz - Insulet Corp.: Robbie, it's Mike. I'll take the fee payment. So we'll determine the fee. As a reminder, the fee is based upon shipments that occur over the next 12 months. It's defined very, very specifically in the agreement. And depending upon the information that we find in – as we kind of get into the details on the customer definition and whatnot, it can lead to a somewhat wide range. And we've disclosed in our SEC documents historically a pretty wide range, as low as $10 million, as high as $50 million. It's not necessarily reflective of – the business is reflective of really the customer as defined in the agreement. And so, that will become clearer as we go forward. Shacey Petrovic - Insulet Corp.: And U-200, we expect that to be in the market sometime towards the end of 2020 or 2021. So that's currently in development and making good progress.

Thank you. Our next question comes from the line of J. P. McKim of Piper Jaffray. Your line is now open. J. P. McKim - Piper Jaffray & Co.: Hi. Thanks for taking the question. I wanted to go back on the international piece where I think there's like two to three weeks here in Q3 and maybe I misunderstood it, but aren't we past two to three weeks here in Q3 already? And if so, does that mean you've worked through all the inventory and you have pretty good visibility into that? Shacey Petrovic - Insulet Corp.: Well, I'll say that July has been very strong. So we do feel optimistic that we're getting this in the rear-view mirror, but we're also sensitive to the fact that we've only had the business for 30 days. And we've been able to validate customer base, inventory levels, et cetera, with about 75% to 80% of our intermediaries. So we're just being cautious in terms of the rest of the area that we haven't quite validated. Maybe that some of these smaller intermediaries, for example, have inventory that we're not yet aware of. But I think indications are strong that it could be behind us and we are very confident that it will be behind us by Q4. J. P. McKim - Piper Jaffray & Co.: Got you. That's helpful. And then, I just wanted to ask one. It sounds like you finally have some competition on the pump side from Roche and I just want to see how you're positioning for that in Europe? How you're thinking about their launch? There's still a lot of room for you to grow over there, but how you're thinking about differentiating your product there? Shacey Petrovic - Insulet Corp.: Sure. We certainly have good insight into Roche's product. We've been contacted by some of the customers in the UK that we're reached out to about participating in a clinical trial with Roche's product. So it's early days and I don't know that anyone has even seen the product, but they have received the user guide. And I think what we're hearing from clinicians is that it's a very complex product. In fact, one customer sent us the user guide and pointed out that it's not waterproof. It's fixed components and has a 12-step process before putting the Pod onto the patient. So I think at least early days, it certainly seems like a fairly complex not as user-friendly device. But our job is to make sure that we have the most compelling delivering mechanism and that we have the best customer service and the best commercial team in the market. So that's certainly what we're focused on. J. P. McKim - Piper Jaffray & Co.: That's helpful. Thank you. Shacey Petrovic - Insulet Corp.: Sure.

Thank you. Our next question comes one of Doug Schenkel of Cowen. Your line is now open. Ryan Blicker - Cowen & Co. LLC: Hi. This is Ryan on for Doug. Thanks for taking my questions. Maybe starting on the U.S. Last quarter you talked about a potential modest headwind from the reduction of inventory from distributors previously helping you access United. It's clearly a great quarter in the U.S., but could have been even bigger. Was this to happen in the quarter and if so, how much? Shacey Petrovic - Insulet Corp.: Yeah, Ryan, I mentioned that earlier. We did have a little bit of lingering headwind in terms of just the – the inventory ramped down from the previous distributor that was serving the United business, because we obviously took that direct. So there was a little bit of a lingering impact this quarter. And then the other headwind that we have that maybe is shown in revenue, but not in installed base is just really tied to mix. We had some surprise wins of Medicare, for example, and that just works against us a little bit. Ryan Blicker - Cowen & Co. LLC: Got it. Sorry, I missed that. And then, maybe moving to China, can you give us an update on how, if at all, you expect tariffs and trade tensions to affect your operations over the next 6 to 12 months given your significant Chinese manufacturing footprint? And on the new U.S. plant in early 2019, can you give us a sense of how much volume you'll be able to ramp production to in 2019 and 2020? I'm just trying to understand if the new plant will be capable of supporting most of your U.S. demand in case tensions escalate? Thank you. Michael L. Levitz - Insulet Corp.: This is Mike. I'll take the tariff question. So we are not covered by any of the tariffs as described so far. So there have been broad statements about tariffs and that's not lost on us on why it's great that we have been establishing the U.S. manufacturing in advance of any of these conversations on tariffs. But right now it doesn't cover our product directly. That said, from a supply chain standpoint, it's something that our supply team is very focused on so that we have contingencies in case – even though it doesn't impact us directly right now, if it does we'll have secondary sources ready to go. So we feel comfortable on that front. Shacey Petrovic - Insulet Corp.: In terms of the ramp up, so we will be ramping up in 2019. So we won't serve the full business probably in the U.S. in 2019. It'll probably be a late 2019, early 2020 event. And I think the good news is that we made this decision strategically to build our U.S. manufacturing before the administration change. So we really are ahead of the game and we should be able to, by the end of 2019, have the vast majority of the U.S. business served out of the U.S. Ryan Blicker - Cowen & Co. LLC: That's great. Thank you.

Thank you. And our next question comes from the line of Jayson Bedford of Raymond James. Your line is now open. Jayson T. Bedford - Raymond James & Associates, Inc.: Good afternoon. Just a couple quick profitability questions. Mike, OpEx came in lower than we were expecting. I assume that P&L is carrying the cost of the 100 reps in Europe. What does the second half OpEx look like? Michael L. Levitz - Insulet Corp.: So specifically to your question about Europe and the international reps, as I mentioned in my earlier comments, we're right on track for the guidance that we'd given going into the year for the cost of the direct business in Europe of $45 million to $50 million run rate on an annual basis. So our spending in the second quarter, as we've been ramping up to that, is directly in line with our previous statements of what we expect that to be. In terms of OpEx in general, yeah, we are favorable to the guidance that we've given before. We are making a lot of investments to continue to drive significant growth on the top line. With all this innovation and sales force expansion and other things, we expect the next several years to continue to drive significant growth. That said, we watch spending very closely. And if we don't need to spend something, we won't. So, yes, we are a bit favorable to what we guided to from an OpEx growth standpoint, but it's not related to short-changing any of our growth initiatives.

Thank you. And our next question comes from the line of Kyle Rose of Canaccord Genuity. Your line is now open. Kyle William Rose - Canaccord Genuity, Inc.: Great. Thank you for taking the question. And we're juggling a few calls, so I apologize if I ask and that's already been answered. But aside from the initial Medicaid, Medicare coverage policies that you cited I think back in the Q1, can you just give us an update as far as how your conversations are going with some of the payors with respect to getting on formularies and then expectations for when we'll have an outlook for that potential impact in 2019? Shacey Petrovic - Insulet Corp.: Sure. Related to Medicare, I think you're asking, right, Kyle? Kyle William Rose - Canaccord Genuity, Inc.: Yeah. Shacey Petrovic - Insulet Corp.: Yeah. Okay. So, yeah, those conversations have been progressing really well and I think that's indicated in the two early decisions that clearly we've got a value proposition that is resonating with the Medicare Part D payors. The way that the process works is we were granted a CMS designation or CMS guidance in January. In April is when all of the negotiations opened for 2019. So from April really through August approximately, we're having discussions with all of the top Medicare Part D providers. And then really in August, end of August through October, they will publish their formulary schedules, and we will see how successful we were. So that means on the next call, which I think is early November or so, we should have kind of full clear picture of what type of 2019 Medicare coverage we've established. And the conversations are going very well. We fully expect to have broad coverage in 2019. Kyle William Rose - Canaccord Genuity, Inc.: Great. That's very helpful. Thank you. And then on the OUS business, I realize it's still early days as far as the transition and it sounds like you've got a busy six months in the back half of the year here. But just wanted to get an update on how you think about OUS longer term and particularly now that you took back all the rights. I mean, how you think about expanding into additional territories and if there's anything we should expect more near-term rather than medium- to long-term, so in next one to two years rather than maybe three to five? Shacey Petrovic - Insulet Corp.: Yeah. Yeah, it's a great question, Kyle, because I think it just highlights one of the primary strategic rationales for making this decision, which is – previously we were constrained and we could not go into a new global market or a new international market without our former distributor. So one of the main motivators was our ability to kind of get control of our international destiny and be able to invest and grow that business. What we've uncovered early on, we've already started new patients in clinicians' offices who told us that they've never seen an Omnipod rep. So we think there's tremendous opportunity to grow right where we are and that's where we're going to be focused from now through the end of this year and going forward. I think it's logical to assume – we see, though, we've had an increasing number of contacts from European markets where Omnipod is not available today for people who want to bring Omnipod there and same thing with kind of additional international markets. So we see a tremendous amount of growth and I would expect that the first wave of that will come right in Europe. We see a lot of opportunity through 2018, early 2019 to continue to grow where we are. I would expect in 2019 we may expand into some new European markets and beyond that we are currently building our strategy for continued growth in Omnipod. And as Pat has said many times, this is just the beginning of our vision to grow Omnipod across the globe. So we're really excited about the opportunities that support us. Kyle William Rose - Canaccord Genuity, Inc.: Great. Thank you very much for taking the question. Shacey Petrovic - Insulet Corp.: Sure.

Thank you. I'm showing no further questions at this time. I would like to turn the conference back over to Patrick Sullivan. Patrick J. Sullivan - Insulet Corp.: Thank you, operator. I am completely delighted with the performance of the company in the two key significant milestones that we achieved this quarter: a very successful transition of the business in Europe and the market introduction of DASH. The teams have worked tirelessly over the last three years to bring these two projects to fruition. And I'd like to thank all Insulet employees for their dedication and hard work in achieving these significant milestones that will add greatly to the long-term trajectory of our business. Congratulations on a job well done. I'm also delighted that we achieved positive operating income of the $4.3 million for this year and remain on track for positive operating income for the year, the first time in the company's history. So thank you on joining us on the call today. We look forward to speaking you on our third quarter conference call in November. Thank you very much.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.