Insulet Corporation's CEO Presents at the Goldman Sachs US Emerging / SMID Cap Growth Conference (Transcript)

| About: Insulet Corporation (PODD)
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Insulet Corporation (NASDAQ:PODD) Goldman Sachs US Emerging / SMID Cap Growth Conference November 14, 2013 8:00 AM ET

Executives

Brian Roberts - CFO

Analysts

Chris Hammond - Goldman Sachs

Chris Hammond - Goldman Sachs

I think we could probably go and get started. It is 8 o'clock and we want to keep everything timely. So for those of you that don't know, my name is Chris Hammond, I am part of the medical technology team here at Goldman. First of all, I would like to welcome everyone to the inaugural Goldman Sachs SMID Cap and Emerging Growth Company Conference. We are extremely pleased to have everybody here. We have got over 60 companies in attendance, and last I saw that, there are about 800 people registered for the conference. So great turnout for the first one, and we hope that it is mutually beneficial for everybody involved.

So before we start, we are required to make certain disclosures about public appearances, about Goldman Sachs' relationships with companies that we discuss. The disclosures relate to investment banking relationships compensation received of over 1% of our ownership. I am prepared to read disclosures for any of these issuers now, or at the end of the conference, and however these disclosures are available on our website, and are available with the US clients on the firm's portal.

So in the room here today, we could start it off, this is Brian Roberts, Chief Financial Officer for Insulet Corporation. It is one of the fastest growing and most [respected] company in the diabetes space, and with that I can turn it over to Brian, he could tell you more about Insulet and the OmniPod.

Brian Roberts

Sure. Thanks for having us. Thanks for hosting, certainly appreciate it. I was talking to somebody the other day, how do you describe kind of the last night or the 100 days that we had at Insulet, and I would tell you, in my five years or so that I have been with the company, it is probably the most challenging quarter we have had, right? And the reason why it was so challenging, was that I think in a lot of ways, is nothing short of moving a mountain by taking over 50,000 people, and effectively transitioning them from our first generation OmniPod to our second generation OmniPod.

So for those of you who do not know us well, we have developed effectively the only patch style insulin pump available throughout the world, that's called the OmniPod and back in December of 2012, we were able to gain approval on a new generation of that product, and that new generation was a significant enhancement for the business, really a win-win in a couple of different ways for the consumer side. Its over a third smaller and its over 25% lighter than its predecessor, and if you are wearing something on your body 24/7/365, the smaller and the lighter, the more discreet [it gets]. And also, enhancements made in that product to improve communication protocols and other things, we just thought there was a much more robust, much higher quality product, that effectively really sets the bar that much higher for anybody who wants about coming in this space in the future.

We are very excited to be able to get that in the hands of all of our consumers, and so the win for us obviously is, by having everybody on the same platform, we can be much more efficient from a manufacturing side, and effectively by moving from one pod to the next, we are able to take their cost of goods sold down on those pods by about 30% each. So it's a significant enhancement for us from a financial perspective as well.

So the Herculean task happened starting in June, to be able to transition over 50,000 people from one product to the next. We did the upgrade for free. Provided them all with a new handheld, effectively the payback on doing that is about four months, so its well-well worth it for the business to go forward with it, and we have effectively just about finished that at this point.

So we had our earnings call last week and we talked about in total with probably over 90% converted. On a direct consumer basis, we are about 98% today. Literally kind of the last stragglers if you will, that are kind of coming in the door, that we are shipping up the new pod to distributors, where it's a little bit more challenging to exact information out of, and we estimate that's probably somewhere in the 80%, 85% range today; could be higher than that, but we just don't have any better data to kind of back it up.

But for all intensive purposes, that whole effort is behind us, and for those of you who have followed the company for a long time, it was really the last of what I'd call is kind of major executional hurdles related to the new pod, to be able to get done. And so we are certainly thrilled and excited by it.

The other side of the coin is around new patient starts, and one of the big questions that I think existed for this business, when we are moving from one product to the next, was -- as I launched Pod-2, will this really be a top line grower, right? A lot of people couldn't understand, they'd do the math, and say okay, my cost of goods sold goes from $14 a pod to $10 to $11 a pod, that's a significant margin improvement, that's great. But will it really grow the top line? And, what our premise has always been was, that the answer would be yes, right. That we would see a lot more doctors embrace this product, look at the form factor of it, realize that we are a here to stay kind of a company, if you will. We are not going anywhere and want to be part of prescribing this product.

To-date, we have been thrilled with the results about eight months sooner (inaudible) to that launch, where we have seen year-over-year patient starts since the beginning of March when we launched the product, running north of 40% increase. You have seen the metric that we gave on our call last week that I think is probably the most important that I can talk about, is one out of four doctors that have prescribed the new OmniPod this year, are new to us. So when you think about the infrastructure of the diabetes industry, hospitals will only put so many people on an insulin pump in a given day, week, month. The more prescribers you have, the better, and we certainly believe that the new OmniPod kind of raising that now to the next level. So it's a real exciting time for the company and we think we are poised for some really cool things going forward.

Chris Hammond - Goldman Sachs

Very good. Very good. That's a great recap of recent events. So if we could take a step back, and think about trends, I was hoping that you could kind of catch us up to speed on what's happening in the diabetes landscape overall? What are the trends that are really impacting patient consumption therapeutic choices, and how is that making an impact from a macro perspective, on the company's outlook?

Brian Roberts

Yeah, I wanted to show a slide of the premise, but this one here is actually an interesting one to that point, right. So in the US today, there is a rough estimate, let's say about 1.6 million people are still living with Type-1 diabetes. Little over 25% of those folks are probably using an insulin pump now. Insulet has really been responsible for a lot of that growth. When I started, again, a handful of years ago, that number was probably more like 22% or so people using insulin pumps, and if you look at our growth and certainly compare it to the non-growth or so of some of our competitors out there, it's clear that Insulet is driving the market.

What's exciting about it for a business like this is, over 70% of our patient starts, are people who come from multiple daily injections, right. The people that have looked at tube pumps, they have looked the lifestyle trade-offs of this thing kind of tethered from you, that are you taking on and on often, and you can't wear it swimming, you can't wear it to the beach, it's going to wind up in the gym locker if you are exercising. And people say, too much work, it's not for me, it doesn't give me enough benefit. And the big benefit of the OmniPod is that once its on, it stays on, it's waterproof and you are able to just go about your day.

So that's a big piece of when you think of the trend, and for us the unfortunate part of Type-1 is that over half of the diagnosis every year are kids, right. This product was very well positioned for that group, and so what we see, is over a third of our patients are under the age of 18. In Q3 alone, that under 18 group grew at over 70% year-over-year clip. Our underage 10 buckets, zero to 10, more than doubled in the third quarter from a year ago. And so a lot of the trends of, where an endocrinologist is referring these patients over, because pump therapy makes sense, more mimicking what your pancreas should be doing, they want to see their patients on pump therapy. OmniPods made it a lot easier for these people to get on this type of a product, and so they are being referred over.

So I think that's one of the big trends that you see today, of people moving more and more towards pumps.

Chris Hammond - Goldman Sachs

Great. Great. So one of the things that we often find in med tech is that there is a lot of confusion or uncertainty, in coming up with a total addressable market, or correctly sizing market opportunity. You dipped into some of the new patient metrics. How are you guys thinking about that market as you go forward within both the US and O-US? Are there particular areas where you guys stand to benefit from growing that market through additional DTC or from education through physicians? How are you guys approaching that?

Brian Roberts

Yeah, I mean, certainly a good chunk of marketing. It's really from, I think from the marketing side, we kind of two-prong it a lot of ways. One is, a lot of it toward the healthcare professional.

Where we freely admit, we are outgunned in terms of numbers of people that are sitting in the field and so, what competition has done a very nice job of it, they in some cases, almost become extensions of staff, for the doctor's office. And so, what we do find is that, the more reach, the more frequency that our reps are showing up in the doctors office, the better, frankly, we do. And so, one of the things we have talked about, as we gain margin points, is we will invest a couple of points to that back in our sales and marketing function. We will bring on probably another 15, 20 or so people come in the first quarter into that team, to kind of continue help us drive that, and be able to see, hopefully a very quick ROI from those guys.

We also do a lot, from a DTC side, it is still kind of a niche, right. So you can go bankrupt in TV for example, but we do an awful lot around paid search, and different things across the web, so if you ultimately come on to the myomnipod website, Insulet or myomnipod.com, either one, what you will find unless you start clearing out your cookies, is all of a sudden you will see a lot of Insulet ads start popping up on website.

Chris Hammond - Goldman Sachs

I have seen it.

Brian Roberts

And we've become very good at that, where I would say five years ago, we didn't have any presence on, Google for example, we are probably one of the last companies to try to jump on the Google bandwagon. Today, through paid search and other efforts, we see almost a 17% conversion rate, really high, right. So you get people who are often looking, searching for things related, and its not just -- you just want to just go buy the keyword, insulin pump, right? You are trying to find all of these other different types of relating keywords, that can drive people who may be looking for things really into diabetes into the mix, and we added an inside sales team back last May, year-ago May, and they have done a phenomenal job of (inaudible) how qualified these people are and really be able to push them through the pipeline.

So that has been a big effort for us, as we kind of move forward.

Question-and-Answer Session

Chris Hammond - Goldman Sachs

Good. Good. And I do want to remind everybody that the discussions are meant to be interactive, so to the extent that you guys have questions, [have for] Brian here. So I got to poll the audience here for any questions?

Unidentified Analyst

[Question Inaudible]. In Boston, and I would love to just get your thoughts and not trying to picking on the spot about that company, but it is sort of a (inaudible) of the iPod type interface, where the young generation -- pumping device. I'd just love to get your perspective on how it will affect the market, and what you think will happen going forward?

Brian Roberts

I guess, probably thinking about it in a couple of different ways. One is, more competition from [winning] the world of tube pumps, I am a fan of, right; because I think for the market leader, they have actually got a nice job of being the kind of pluck away, some of the folks that were within kind of -- the market leaders kind of with their tube products.

I think what it comes down to, when we think about it, it's not a company we see as often, and what we are doing, and I think a lot of -- we are going after slightly different patients in some cases, because I think if you think about a person who is considering going on an insulin pump, that first decision point really just becomes tubeless, right? With tubes pumps, even though, they absolutely have done a very nice job with kind of an easier looking interface than Medtronic or Animas as examples, its still tubes, right; and it still has a lot of the same issues that a tubes product has, where you are connecting, and you are disconnecting and you are taking off, and you got to charge it, when effectively it's either on, you are in the shower for a couple of minutes, you are plugging yourself into a car adapter.

There is a lot of those types of challenges that still makes tubes products for a lot of these different markets that they are talking about, especially the 18 and unders, not something that's as exciting.

Today, as we sit north of 50,000 or so patients, what I can tell you is, the reason is a single patient, that has either come or gone from Insulet in our history, due to the PDM, due to the handheld. The decision point that people is, do I want to wear this pod on my body 24/7 right, or not? And we certainly that by wearing that pod on your body, then you are getting a much simpler, easy to use type of a pump system, than what any of these other guys have, right.

The stuff like, a little slide in there, those three simple steps. Someone can do it and ultimately be to be able to activate a pod, and you can change your pod out in a matter of a couple of minutes. Changing out infusion sets, refilling pumps, going through all that process, takes a lot of time, it's cumbersome, and I think those are the things that, especially when you talk about some of these demographics, under 18, women for example, where the new pods are very attractive products for someone. Again, a lot of women I have talked with, some of the issues like, where is that product like I used to wear a conventional pump. I never had anywhere to clip it to my dress. Couldn't wear dresses, right. By ultimately having this type of a product, you get a lot more freedom than a tube product does.

That said, I think they have done a nice job of coming up with a easier to use tube pump. Yes sir.

Unidentified Analyst

[Question Inaudible]. Two questions for you, one is how do the tube people respond to -- your argument (inaudible) that tubeless seem more convenient. But they must have some sort of response, and then also why don't you kind of update us on what you here, and now with Medtronic (inaudible) tubeless line as well. [Question Inaudible].

Brian Roberts

I will answer the latter first, right, and I think they have been a proverbial three years away for at least the five years that I have been around, I think they will find that will continue to be three years away for a while. There is a couple of real challenges for them, as they think about getting into this space. I think its one of the things that, people say well it's insulin pumps, and therefore all these guys are going to jump in and we are probably seeking around seven years now, and we continue to take a pretty good chunk of share. It's harder to do than people, who I think gave it a lot of credit for. I mean, to put it in perspective, the manufacturing is a very-very different type of animal, than what a tube pump producer makes.

So in Medtronic's case, I would estimate that they probably make somewhere around 100,000 pumps a year, on average, right. They got probably 1.25 million patients to figure a fourth of them are coming up on warranties every year, little bit of new patient adds. They are making somewhere probably around 100,000 pumps a year, maybe a little more. You do that in a few days, right? On Friday of last week, we made 44,000 pods in a day, right? So we are at a point now, where we are making over 1 million insulin pumps, and every one of these is an insulin pump, right? It's FDA qualified and goes through some rigorous control procedures, we can make over 1 million in a month now.

So, it's just a very different type of a manufacturing, than what you see in an awful lot of these other players.

From their side, what are they going to kind of tell, well certainly, they are talking about -- some of them talk about disconnecting as a benefit, right, versus being able to stay on the product, and we would argue differently, and there is clinical work that shows it, as you are disconnecting from your pump, your blood sugars are going up, because you are not getting insulin, so that's one piece. And again, they are -- the products themselves, they work, right. And so people who have been on those type of products for a longer period of time, and are comfortable with those type of products are going to continue to use those type of products, and I think that's why you see them be very effective, for example, in upgrading an awful lot of (inaudible), from one product to the next.

Over the last few quarters, you have seen, where they haven't had a new product, their numbers were declining. So certainly, from a patient share, new patient add side, we feel that we are doing pretty well in that area.

Chris Hammond - Goldman Sachs

So since the competition question has come up, is there anything surrounding the IP that makes OmniPod better positioned than some of the other peers? I think, over time, I have seen some items that were either -- potential tubeless competition, where it wasn't waterproof, the assembly wasn't as good. Is there something with the insertion mechanism? What IP is out that helps keep that competitive mode?

Brian Roberts

We certainly have -- we have about 19 patents in total. (Inaudible) researching and distributing one of those that, I think has differentiated us a lot from some of the different types of the companies has kind of tried and (inaudible) over the course, through the last few years, I mean, I can tell you that, one of the earliest versions of the OmniPod from circa 2003 or so was a multiple component type system. And what you quickly found, is that it was really too hard to manufacture. So you are ultimately trying to get something that you are going to have extremely tight tolerances on, to be able to get that product to be together, and to effectively be able to work and keep it waterproof.

And so, for example, Roche had bought a company a few years ago, one of the challenges of that and why they have effectively kind of mothballed it, is it was bigger than what the OmniPod is, and it was multiple components, and it wasn't waterproof, and you had to kind of put a cover on when you are going to take a shower. Again, you got put yourself in the mindset, in a lot of cases of a person living with diabetes. And in complete candor, I can only talk about it, I am not living with it, but you try to talk to an awful lot of people, and short of a cure, what people want, is to not have to think about the fact that he has diabetes.

So you can go to the psyche of it a little bit, and probably the most common place that patients wear our product, is on the back of their arm, right? So when they take their shirt off, they don't necessarily have to see the pod all over, right. They are not reminded of it constantly. Patients are having a hard problem with diabetes, every time you eat, drink, exercise, doing things, your blood sugar is maybe going all over the place. Every time you have cold, right? I mean, weather changes, and stuff that will impact your blood sugars, and therefore, it's an intrusive disease. So what people want, is to be able to make it as easy as possible.

I will tell a story a little bit, one of our guys, has been around a long time, lived with Type-1 pretty much his entire life. One of our former Board members, just a few years ago, former Board member, acting to try out a new blood group pulse meter for a venture capital type company, that they were thinking of investing in. And at this point in time, meters had moved to kind of five seconds (inaudible).

So this meter however, was promising an easier to use model around more accuracy around the data, and all this good stuff, but it took eight seconds to be able to get the reading. And this guy's response to our board member to probably to Duane's horror was no, not going to try it, won't do it, right? And they asked him why, and he said listen, I test my blood sugars on average a dozen times a day. Three seconds per test, seven times a day, is 21 seconds, times 365 days, times the rest of my life. He said, why would I give any more time back to this goddamn disease, right, that I already have? And maximize to other people. This matters to folks, right? The fact that you can ultimately take the infusion set changeout process, which a lot of people won't do on their three days that they look forward and they wait, because its cumbersome and it hurts and everything else, and you eliminate a lot of that, you get more compliance, right?

It's why for our under 18s as an example, our attrition rate of our attrition of our under 18s is less than 5%, right? Parents will go about food first, before they will take their kids off this product, that's helping their kids, right. And those patients, once they are on, forcing cures and anywhere close, they are on forever. You are thinking about -- I think about my kids sometimes, and with technology and things, and my nine year old daughter using iPod touches and texting and all that, she is never going to go use a cassette or a tape? She is never going to back and understand what a vinyl record is. She doesn't have an understanding that TV shows used to be on only at certain times of the day, right, when she was four years old, these are just on-demand pulling up shows all the time.

It's the same thing with these products. We don't lose people with tube pumps. You lose people who ultimately are multiple daily injectors, and they decide I don't want to manage my diabetes this way, because it is much more active management to manage your diabetes on a pump, than to give yourself half a dozen injections over the course of 24 hours. We see people leave for that, but we don't see people leaving us and going to tube products.

Chris Hammond - Goldman Sachs

Right. So before we leave products completely, I was hoping you could give us a refresher of what's in the pipeline? I believe there are some longer term agreements or co-development things or -- I believe at one point there was, DexCom on the CGM side, and what should both patients and investors be looking for, say, over the medium term?

Brian Roberts

Yeah, so I think we are entering a pretty interesting kind of innovative product cycle within us, where having a new pod finally approved and (inaudible) again through the hurdle of transitioning the days, really now opens up the company to do a lot of other things. And so, the first is, within the Type-1 space, we are still kind of at the tip of the iceberg, right? We are still, if you look at that total pie that I showed earlier, 1.6 million people, and most of our people are coming from injections, we are still less than 4% of the market in the US. We are less than that international, and we are in about 12 international markets today.

But, in the Type-2 space which the American Diabetes Association back in March, put out numbers that kind of quantify that around 20 million people living the Type-2 diabetes in the US. Approximately 10% of those people, are towards the point where they are becoming insulin dependent, right? They have tried all the other things first, and they have now become insulin dependent. We signed a partnership with Eli Lilly to develop a version of the OmniPod, leverages the same pod, all the changes are in the handheld, specifically designed to work with a Humulin U-500 Insulin, which is a five times concentration insulin for what you have pumped today. Specifically geared towards folks really in the Type-2 space who have -- who are highly insulin resistant and require a lot of insulin per day.

So think of it as somebody who needs 150 units of insulin or so per day. The problem with that product in those cases is effectively a one-day wear. And so, economically, that's not as attractive when you are changing out more than you'd like. By going to a U-500, that 150 units now becomes 30 units roughly. You are back to a three day, or may be even a four-day wear device, that can really help with that group. There was a study done back in 2009, a doctor named Wendy Lane did it, where she took a group of high body mass index Type-2s who really kind of failed at all the different levels of compliance. Put them on the OmniPods with Humulin U-500 Insulin, and I think over 90% of them showed a normal A1C after 90 days. Very compelling, took us four years to convince Lilly to go forward with it, but we are there now, and we are working on it. So the hope there is that could be a product that we will have in market in 2015.

Little sooner than that, is where we are kind of on the five yard line or so here for a while but hopefully we are going to be punching in a goal pretty soon, of kind of finishing up this partnership relationship we have with this major pharma partner, its to be able to leverage the OmniPod for a drug in the oncology space. And as soon as we are over the goal line, we will be able to talk more about it. But really interesting product where, you effectively take the pod and think of the doctor as having kind of the super PDM into his office, where he will effectively pre-fill the pod in the doctors office, activate it, and make sure that there is no issues. Activate it in the doctors office, and then you will go home, and the drug will dispense at kind of a predetermined time, post you leaving the office. We have added a little LED indicator light to the top housing of the pod, so that you will know when its effectively running and when its effectively done, and then when its done, you just take pod off, and off you go.

So it's an interesting different model for the drug, and for the pod, and there is a whole slew of -- that's probably a late 2014 [fitting] the market type of a thing. There is a whole slew of other, I'd kind of call these other drug delivery type opportunities, that are at various stages. Where hopefully you will see one hitting the market or so, every, call it 18 months or so, over the next probably five years at least.

The last thing is, in the world of continuous glucose monitoring; we are making progress, albeit probably a little slower than we hoped with the partner, to ultimately integrate a sensor directly into the OmniPod itself, and why that's interesting, it's because if you think about the use model today, and go back to the whole concept, it's simple. People have to wear two things in the body, they want to be able to use a pump and they want to use CGM, and I would tell you at the local level, we continue -- our local guys work with the DexCom guys on a daily basis, and everybody is just great. It's one of the ways we go back and we talk about the tube pump guys, they say listen, if you put the DexCom and the OmniPod together, you are getting the best of both breeds, and by the way, that's still a lot less stuff and a lot easier to use than still all these kind of things that come with the conventional pump.

What we are doing is, and what makes us unique is, because we have this pod, if you were to pull the cover off the pod and then kind of look at all of the different components that make up a sensor and a transmitter for a CGM system, a lot of the things that are pretty similar, from insertion to a micro-chip from antenna to batteries, all of these things are common to both products, and we feel pretty comfortable, and we have been working very hard on the design of an insertion mechanism, that effectively will allow us to deliver the sensor and the tubing next to each other, which effectively brings the patient to just one thing on the body. And if you pull -- the talk to a lot of endocrinologists, what you will find is, the number one complaint in the old days with CGM was accuracy. DexCom has done a phenomenal job of being able to really ratchet the game up there.

The second most common complaint was utilization; because people just don't want to wear all the stuff on the bodies all the time, and they'd have it on and off. And so, what we used to see is, from a marketing side, over 90% of the people living with diabetes, Type-1 diabetes, are willing to wear one thing on the body. That number goes down to about 42%. When you say two things, (inaudible). But being able to leverage the pod and all the -- effectively the characteristics of it, we feel like we could put a wire, which is effectively the sensor in it. Not add a lot of cost to the product, and be able to solve that problem from the patient side, be able to solve it from a doctor's side for utilization, and frankly, if you look at levels of reimbursement and all lines, you would probably think you can give a little bit back to the reimbursement guys, and come up with something that's a higher margin for us.

So it's interesting, and that's probably more of a -- realistically, I think its probably more of a 2017 type of a product formally, actually to be here in the US. The hope is, maybe we will be doing some human trial type with, somewhere around -- towards probably the middle to the end of next year.

Chris Hammond - Goldman Sachs

So just a few minutes left here, I want to turn back to the audience and see if there are any questions at this point, and if not, I will proceed. Why don't we take a look back at the industry again? So arguably, you could say that the diabetes overall, very fragmented space. Curious to get your most up-to-date views on, what are the opportunities for industry consolidation? I believe, just probably about two years ago now, that you guys did the neighborhood deal, just as an example, consolidation in the industry. Are there areas where you see potential consolidation going forward, that could be attractive for the industry overall? And with regards to neighborhood, at this point, is it going -- are the synergies there in terms of patient adds that you hope will be there, or is there somewhat of a desire?

Brian Roberts

No I mean, I will tackle the neighborhood one first. The benefit of neighborhood to this business really is, it's hard to measure. I would say, kind of the not so affecting stuff, right. So we just finished this patient conversion. One of the things that I think we see, is every single order that goes out of insulin stores today, goes through neighborhood. So we have completely integrated in, that whole back office infrastructure from reimbursement to distribution, and by the way, they were a lot better at it than we were. And so, we think about the leverage that we have been able to gain, from an infrastructure, side, I'd give that thing an A. And I think, that could show you, better DSOs, and better patient conversion and lower cost of shipment, are kind of metrics that kind of come out of that. That's not the great stuff.

On the top line, freely admit, it has been a lot harder than we thought, to be able to get some of the benefits of the cross selling type initiatives that we hoped for, and there is a whole bunch of reasons for it. We are hoping that as we move towards the J&J meter, midyear or so next year, there is an opportunity to rekindle some of that, because J&J enjoys better positioning within the pharmacy, especially on tier-1 copays, that became a lot of a complexity for us in working with that, where they were a tier-3 in a lot cases, and they are trying to match copay cards and other stuff, that from a patient side, it's too complicated, not going to move forward from it.

That said, I think as we look at investing and going forward, certainly the infrastructure piece is critical to us and we will continue to move forward with. But we are continuing to shift, I'd say more of our investment dollars towards the OmniPod side, as compared to the neighborhood side. That was always our core. That's always where we wanted to grow. I mean, the competitive good stuff as an example, that was never core to us. It was still surprising at how low the price was, right, and it forced us completely out, versus kind of more of a -- may be a softer landing. But in the whole, we have still been able to manage that business, such that it's breakeven, it's certainly profitable today in the operating income line. So its effectively, kind of a paid for itself back office, and that part has been good for us.

In terms of overall consolidation, I don't know, right? I mean, I think, part of the challenge is, as we look at a lot of the major players in this space, they have all had some significant issues today, right? I mean, a lot of it in the blood glucose meter space, as well back in the J&J restructuring again the other day, we have seen, is out there. Similar to a lot of major pharma companies and the rapid acting insulin space are dealing with generic competition on the horizon. So we will see.

I think what the Insulet team has always done a good job of, I think the board and management an awful lot of credit, certainly predates me, was running this business in a prudent enough way, where you can achieve high levels of growth, but then we always had profitability in mind as well. So we sit in a pretty enviable position today, where we are still growing at a high rate. We have had positive cash flow now for the last two quarters, and effectively where this quarter, our free flows would be EBIT positive, and that's a good place.

Chris Hammond - Goldman Sachs

Great, great. With that, it looks like we are out of time, and thank you Brian for speaking with us today.

Brian Roberts

A pleasure. Thanks everybody.

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