Welcome to the Insulet Corporation's second-quarter 2016 earnings conference call. [Operator Instructions]. I would now like to turn the conference over to your host, Deborah Gordon, Vice President, Investor Relations and Corporate Communications.

Thank you. Good afternoon and thank you for joining us for our second-quarter 2016 earnings call. Joining me today are Patrick Sullivan, our President and Chief Executive Officer; Shacey Petrovic, President of Insulin Diabetes Products; Michael Levitz, Chief Financial Officer; and Dan Levangie, President, Insulet Drug Delivery. The replay of this call will be archived on our website. Our press release discussing our second-quarter 2016 results and third-quarter and full-year 2016 guidance is also available the IR section of our website. Before we begin, we 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 and our second-quarter earnings release and in the Company's filings with the SEC. With that, let me turn the call over to Pat.

Thank you, Deb. Good afternoon, everyone, and thank you for joining us on the call today. First of all, I'd like to begin with a brief review of our second-quarter performance and the recent business highlights. Following my remarks, Mike will discuss our financial results in more detail and provide our third-quarter and full-year guidance. As noted in the press release, we are raising the full-year guidance by $10 million at the midpoint. Shacey will then provide an update on our exciting commercial progress. We will then turn the call over for questions. To start off with, I am just absolutely thrilled with the performance of the Company for the quarter. Our positive momentum accelerated throughout the second quarter, and I have been very impressed with the significant progress our team has made on all our key commercial and operational initiatives across each area of the business. We are building on our foundations and executing our strategy to deliver long-term, sustainable, and profitable growth. While we realize there's still a lot of work for us to do, we continue to grow our top line and invest in the business to deliver innovation to our customers and significantly improve our operational and manufacturing processes while remaining focused like a laser beam on achieving our profitability goal. I'm very confident in our ability to drive long-term shareholder value. As Shacey will describe in more detail later, we had two publications in the Journal of Diabetes Science and Technology as well as six presentations at the American Diabetes Association's 76th Scientific Session of new data demonstrating the benefits of Insulet's OmniPod system for people living with Type 1 and Type 2 diabetes. We will continue to invest in clinical studies to build the bibliography of scientific evidence demonstrating the clinical and economic benefits…

Thank you, Pat. I will review the second-quarter 2016 results and then introduce our third-quarter guidance and update our full-year guidance. Our prior-year results, for comparative purposes, exclude Neighborhood Diabetes, which we divested this February. As I review our results, unless otherwise stated, all commentary regarding changes will be on a year-over-year basis. We are very pleased to report second-quarter revenue growth of 44%, with revenue of $87.3 million compared to $60.6 million. All three of our product lines contributed meaningfully to this increase. Our results this past quarter once again demonstrated significant growth, driven by the success of the ongoing commercial initiatives within our US diabetes business, rapid volume growth internationally, and dramatic growth in drug delivery. While we had an easier year-over-year comparison within our international business resulting from the lower shipments in the second quarter of 2015, on an apples-to-apples basis the growth in this business was substantial and exceeded our expectations due to strong end-user demand across our international markets as well as early success we are experiencing in France, where OmniPod was launched during the second quarter. We are also very pleased, as Pat said, to report our gross margin increase to 57.8%, up from 50.4%, again exceeding our expectations as our investments in improving manufacturing and supply chain efficiency and effectiveness, as well as improving the overall product quality, are already beginning to pay off. As a result, we believe that our gross margin this quarter represents a new baseline for our business and is indicative of what we expect to realize during the second half of this year. We expect this will result in gross margins for the year in the mid-to-upper 50% range, up from our earlier expectations of the low-to-mid 50% range, based on the significant progress made to date on…

Thanks, Mike. As we shared with you all on our last two earnings calls, we have a large and exciting market opportunity before us. And thanks to continued commercial focus and execution, we are retaining and converting new OmniPod users at unprecedented rates. And as Pat stated, we are on track to grow our US new users and our global OmniPod installed base by 20% this year. Q2 was another successful quarter with record-setting new patient starts, and we are well on our way to achieving our objectives for the year. Our strong commercial execution is driving market adoption around the world through targeted clinical messaging on the significant benefits of OmniPod, particularly from multiple daily injection users; through robust adoption in the United States of our best-in-class data management system, Insulet Provided Glooko; through increased focus on our new user training, customer support, and an exceptional customer experience; and, finally, through high growth rates in our international markets. I'll briefly expand on each of these. Our team continues to reach payors and high potential endocrinology accounts with a simple clinical message, OmniPod improves glycemic control, it enhances quality of life, and it provides an unparalleled freedom for people living with insulin-dependent diabetes. In June this message was buoyed by a strong clinical presence at the American Diabetes Association's Scientific Sessions and also by the publication of two compelling OmniPod clinical studies. At ADA, there were six presentations that demonstrated the benefits of OmniPod, including data from a large, retrospective study evaluating patients with both Type 1 and Type 2 diabetes. This study demonstrated statistically significant and clinically meaningful improvements in A1c levels, reduced hypoglycemic events, and reduced total daily dose of insulin three months after starting OmniPod -- compared not only to previous MDI therapy but also, remarkably, compared…

Thanks, Shacey. Operator, we'll now open up the call for questions.

[Operator Instructions]. Our first question comes from the line of Danielle Antalffy from Leerink Partners.

Thanks so much for taking the question, and congrats on a really great quarter. It's great to see. I was wondering -- I don't know if, Shacey, you can comment on this, but is there any way to parse out from a new patient add perspective -- strong numbers in the quarter; how much is coming from new physicians prescribing versus sort of same-store kind of sales?

Sure, yes, it's a good question, and we watch it carefully. In fact, we saw both an expansion of prescribing physicians as well as an increase in depth or utilization among our prescribing physicians. So I would say actually the depth may have contributed a little bit more, but we did see both breadth and depth increase so far this year.

Okay. And any sense of what is driving that? I know you have a few things going on right now. You sort of revamped the sales force; you've got the partnerships with the Omnipod Podder. So I guess -- and the remote monitoring, and things like that. So I'm just wondering, what's driving that, and how sustainable is it? And what might be the right growth outlook for the business over the medium to long term, now that you are seeing such better performance so far year to date?

So on the first part, what's driving this, clearly, our sales force is really hitting its stride after the expansion that we completed in 2015. In fact, we see efficiency back to pre-expansion levels or even slightly above that. So that's starting to really pay off for us. We see, obviously, the clinical data that was presented at ADA having a nice halo effect on support and adoption for OmniPod, and same thing with increased access. And so, as you all know, I think, we expanded our market access team. We doubled that team earlier this year, and they're having some success in terms of driving Medicaid access across the country. So all of those things are adding to more physicians prescribing more. And I think in terms of depth, Insulet Provided Glooko is really helping with depth and getting more utilization out of clinicians who were already prescribing a little bit of OmniPod.

Our next question comes from the line of Tao Levy from Wedbush.

Congratulations on a very nice quarter. So the question I had, what type of visibility do you have into your distributors -- just to make sure this phenomenal quarter is really driven by end users? And also, if you could comment on pediatrics and kind of how that performed in the quarter versus non-pediatric patients? Thanks.

I'll answer the distributor question, Tao. It was absolutely, positively a cleaning quarter. There was no stocking in any of the channel anywhere in the world.

Nor will there be.

Ever.

In terms of pediatric, population is still our fastest-growing patient population and still a great contributor this quarter.

Our next question comes from the line of James Francescone from Morgan Stanley.

Thanks for taking the question. I just wanted to clarify point. The gross margin target in the long-term of 65% -- you didn't quite frame it like this, but as recently as last quarter we were talking about 60%. So we've added 5 points to the GM outlook in a quarter. Is that correct?

This is Mike. Yes, that's correct. To be clear, what we've said before is we said 60%-plus was our target. But we felt we needed to prove our way there. As Pat mentioned, we brought in a new team in operations. We made a lot of effort, a lot of investments in that space just a few short months ago. And our expectation was that it was going to take a good amount of time to really see the benefits. And we are pleased that we are seeing the benefits sooner. And based upon what we are seeing and the opportunities, some of which Pat laid out, we believe not only that this is sustainable at this level, but that the opportunities that are ahead of us are meaningful and actionable. And so Pat laid out a few examples of those. And there are others that we are evaluating that we believe give us a clear line of sight to the higher target of 65% and beyond.

Okay, that's helpful. And then further on down in the P&L, you have managed to add a lot of revenue over the past four or five quarters while sales and marketing has been essentially flat, maybe even down a little bit. Can you help us -- you know, maybe comment on, one, why you've been so successful at adding revenue without adding a whole lot of cost? And then, two, how does that play out in the future? I mean, are we getting close to a point where we need to reinvest a bit in sales and marketing to continue to fuel that growth?

This is Mike. I'll answer first, and if Shacey wants to add anything -- so we mentioned in the past that we added the -- we significantly increased the sales force ahead of revenue a year ago, in the middle of 2015. And we said that we expect it takes about a year for the reps to get up to the, you know, efficiency. We also made investments in customer care and other areas, all of which hit in the sales and marketing line ahead of when the revenue would come. And now the team has been on board for a year, has settled in, and are performing as we had hoped they would and expected that they would. So therefore, I think it is fair that we expected this kind of leverage off of that team. That said, we don't believe that we are done investing. But it's success-oriented investing. And Shacey mentioned the investment we made in the managed care team; you know, market access is an important area for us. We do expect that the level of expenses will reflect continued investment, and really -- but it's success-oriented, and it's driven by initiatives that we believe will meaningfully impact the top line and ultimately the profitability goals, as Pat said. Shacey, I don't know if --?

Yes, the only thing I would add to that -- actually, just maybe echo what Mike said. Both customer care in terms of the pipeline management and supporting customer retention as well as the urgency of the reps is really paying off. And then we saw the managed care team, the market access team have some success really this year, too, with additional Medicaid wins. And so those things all kind of conspire together to drive revenue growth with the investments that we had already made last year and earlier this year.

Our next question comes from the line of Mike Weinstein from JPMorgan.

Thank you. I'll add to the congratulations on the quarter. I want to focus on the gross margin improvement and really want to connect the gross margin improvement to the inventory build, because when I look at your inventory levels, it looks like they increase 75% from 1Q to 2Q and 100% since the end of the year. So that, I would assume, would seem to explain the vast majority of the gross margin improvement this quarter. So the question is, one, is this new level of inventory level the right level to assume going forward; and, two, is it correct in the longer-term to extrapolate off this 2Q gross margin? I understand that you're trying to make this transition on your freight, on your shipments of product from China to the US. But we saw this big gross margin benefit this quarter from inventory ramping up dramatically. I just want to make sure that we are thinking about this correctly. Thanks.

I don't think you're thinking about this correctly. At the end of last year, we -- as a result of the field actions that we took and the recalls that we conducted, we basically went fairly low on inventory as a result of those two market actions. So we were low on inventory at the end of last year and built that inventory up to essentially the same level that we had previously to the -- you know, to the recall that we had in the third quarter of last year. So I would say all of what you're seeing here is improved efficiencies in the factory. I mean, a 50% daily volume increase in daily volume is terrific, and reducing scrap by 50% is terrific. And it's not due to changing inventory levels at all.

I'm just looking at historical inventory levels, and this is just -- this is a lot higher than we've ever seen before. It's 70% higher than what we've seen historically.

Mike, this is Mike Levitz. I will say that the improvement in gross margin this quarter -- I would echo what Pat said -- is not related to us building inventory. So in terms of your first question about the gross margin levels, as I said in my earlier remarks, we expect that this is the new baseline for our business. And we also raised our target because of what we are seeing operationally -- both our target for this year and our expectations for this year and also our longer-term target. In terms of inventory balance in your second question about, you know, is this the -- what we should expect at the inventory level, one of the things that we have been doing, first of all, is what Pat said, which is rebuilding the inventory to levels that we are comfortable with for regular -- I mean, we've got dramatically growing demand. And so we need to make sure that we have the supply for that. But in addition to that, Pat talked about one initiative to drive gross margin improvement, and that being the move from air freight to ocean freight. And in order to do that, essentially you have a warehouse on the water, if you will, that you need to stock for. So as we make that transition to driving these gross margin improvements, we do expect that we will be building inventory for that initiative. But I think that's a specific initiative, and that's the basis for the build as we go into the upcoming portion of the year. And now, obviously, we have upcoming product launches and other things that we've been talking about.

And just -- Mike, when you think about this, it's basically last year -- at this time last year we had about 30 days on hand, and just right now we have about 30 days on hand of finished goods inventory. We had to dip down in the back half of last year due to the Field Safety Notifications and the recall, which took us to lower inventory levels then. And now we're building back up and now getting to where essentially we were last year at this point in time. Looking forward to the end of the year, we want to have another month of inventory that we're going to have, so that we can go to the ocean and generate a point of gross margin as a result of that savings.

Okay. Is there inventory guidance, if you would, for the rest of the year?

No, there is not.

Okay. I'll jump back in queue. I have some other questions, but I want to let some others jump in. Thanks.

Our next question comes from the line of Brooks West from Piper Jaffray.

Shacey, you mentioned patient retention in your prepared remarks. I wonder if you'd give us updated thoughts on attrition rates. And I've asked this question in the past -- you know, you have set line of sight to maybe aspirational 7%, 8%. Just wonder if you've got updated thoughts on attrition rate, given the progress you have seen in the business?

Yes, so we continue to make progress on new patient retention. And then the bigger nut for us in terms of the value it drives the organization is total retention for the installed base. And that just takes a little bit longer to see full results because of the year lagging. But the results are looking pretty encouraging halfway through the year. So that certainly seems to be contributing to the strong quarter we had this quarter, because our reorders -- which is one thing that we look for to signal retention -- were strong. So making progress on that longer-term goal of reducing attrition by 2%.

Great. And then, Pat, we've talked about this privately, but I wanted to ask you the question on the call. We get questions -- and these are framed as concerns -- about your European distributor. That contract is coming up for renewal. And without tipping your hand, I wonder a couple of things, when does that contract come up, and when might it be renegotiated? If you were to have to take that geography direct, I'm wondering if you could talk conceptually about what that would entail, and then the kind of cost benefit versus -- you know, the margin you would receive versus the money you'd have to spend to do that. Thanks.

We have been -- we are very pleased with the relationship we've had Ypsomed, to be specific on the contract that expires mid-2018, and we will get together with Ypsomed probably early next year to talk about the agreement. We would love to continue the relationship with Ypsomed going forward. But we are evaluating all of our options and opportunities to provide patients in Europe the best delivery system that we possibly can. I think it's premature for us to talk about what an alternative plan would be, because we're not in that frame of mind right now.

Our next question comes from the line of Ben Andrew from William Blair.

Maybe talk a little bit about, Shacey, what the bottleneck is now? Because obviously you guys have broken through with new patient adds, retention, productivity of the reps. Where are you seeing the constraints on the business? And is the mix of patients changing in terms of where they are coming from, whether MDI or existing pumpers?

Those are great questions, Ben. I would say the mix is not changing. So we still see, depending on the quarter, anywhere from 70% to 80% of our new users coming from multiple daily injection patients, which is why we are focused so heavily there. In terms of the bottlenecks, when we think about when we might expand sales force, for example, we think about things like market access -- so Medicare, continuing to increase Medicaid access are two things that could really make a difference for our business. And then I would say the other piece of it is really about the insulin capacity of the pod. And it's one of the reasons why we've invested in the concentrated insulins is because it enables us to serve people who have higher insulin requirements, daily requirements. And so that opens up -- as I said, it doubles our potential market. So those are really, to me, the two big areas. I think we're going to continue to see great growth. We certainly have a lot of opportunity in front of us. Today, when we think about market share, we think of market share of total people in the United States living with Type 1 diabetes. We probably have a 4%, maybe approaching 5%, share. So even with some of the market access opportunities before us in concentrated insulins, we have a lot of runway and, I think, a lot of great growth ahead of us.

Our next question comes from the line of Jayson Bedford from Raymond James.

Nice job on the progress; you guys are doing a good job. Just a couple questions. In the US, is there any way you can give us a new patient growth number in the quarter? Meaning -- it's tough to get to your US number without a new patient add number that implies growth well north of 20%. So I'm also a little surprised you're not lifting your expectation for 20% growth in new patients in the installed base.

Well, we did have a record growth number, as I indicated, but it's in line with our forecasted expectations of 20% growth. And the reason, Jayson, we don't give it is because it just seems like it could be misleading. At the end of the day, the numbers only represent 10% or less of our revenue in any given quarter. And so because of the recurring revenue model, really retention contributes as well as new patient growth. And so it's not a great indicator. But it is an indicator of where things are going in the future, and for that we are really excited. We had a record growth in terms of new patient starts. And we are on track for 20% growth year-over-year of our US new patients as well as our installed base.

Our next question comes from the line of Raj Denhoy from Jefferies.

I wonder if I could ask just a couple of broader questions. You know, we saw United Healthcare decision -- I think it was this quarter. Obviously, it didn't impact you, but I'm curious your thoughts on the possibility for similar types of programs, some other payors -- how that might impact your business going forward?

Sure. So you're right; the United Healthcare decision didn't impact OmniPod. But earlier this year we had increased our -- the size of our market access team, mainly because we knew we were going to be arming them with really solid clinical data that they could go to the payors with. And so we've had discussions with all of our major payors. And we don't see this as a trend. We don't anticipate that other large payors are going to be taking Omni's preferred provider arrangement.

And we believe that the choice of what insulin delivery system a patient chooses should be a decision made by the physician, not the insurance company.

Our next question comes from the line of Doug Schenkel from Cowen and Company.

Hi, this is Ryan Blicker in for Doug. Thanks for taking my questions. Thank you for all the color on the gross margins and the exciting initiative you have ongoing. Can you give us a sense of how you're thinking about the time frame for your new 65% gross margin target, and maybe how sensitive this target is to drug delivery revenue? For instance, I know this isn't your expectation, but if for some reason drug delivery revenue did not grow in 2017 and 2018, do you still think that level of gross margin or something close to it is still achievable?

This is Mike. So as one of the previous questions referenced, our prior stated goal was 60%, and now we have raised it to 65%. And when we laid out the 60% goal, that was over a multiyear period of time. And the same is true with the 65% target. What we have said is that we have clear line of sight to it. But these activities take a lot of work, and they take time. They take continued investment. In terms of the impact of drug delivery on that particular metric, I wouldn't say that it has an outsized impact on it. The initiatives Pat have described and that we've talked in part about before are really operational in nature and not related to mix. There are puts and takes on the mix side. Our international business, and principally our distributors, I should say; not as much international business -- but our international distributors tend to have a lower contribution margin, whereas drug delivery tends to have a higher. So there is somewhat of an offset as we've seen outsized growth in both of those areas. So mix is -- I wouldn't say it's not a contributor at all, but it's not the driving force behind us achieving these targets.

Our next question comes from the line of Suraj Kalia from Northland Securities.

So, Patrick, a lot of the questions have been asked. Let me see if I can dig into a couple of other areas. I'm sure you saw the recent CRL letter for Novartis's Neulasta biosimilar. One would think the CRL and the delay thereof at least would provide a temporary positive environment for Amgen and, thereof, to you guys. I guess where I'm headed with this, Patrick, is, does your contract with Amgen -- is it exclusive? Does it prevent you all to talking with other players? And does that flow through other areas, also, whether it's Lilly or any other players in terms of biosimilars?

Dan, would you like to take that one?

Yes, sure. Thanks for the question. I would say we'd rather not comment on specific details of our agreement with Amgen. I would echo your sentiment, however, that the CRL that was issued for the Neulasta biosimilar -- we see that as very good news, frankly, for our business. You know, the adoption of this combination product since February of last year has really been dramatic and above expectations, and we see that continuing going forward. It's really remarkable convenience for these patients who are undergoing chemotherapy. So we think the runway has been plectant, and there is a degree of excitement, both at Insulet and at Amgen, that we've got a longer runway to convert the market. So we're working together to achieve that.

Our next question comes from the line of Jeff Johnson from Robert Baird.

Congratulations on the quarter. Shacey, I was hoping I could ask you a couple pipeline questions. On the AP front, can you put any goalposts out there as far as maybe timelines for IDE, pivotal timing, things like that? And then, would it be a combined kind of PlGF and hyper combined study, or are you going to go stepwise? I think I have asked you that question before, but just want to confirm that. And then my last question on that whole side would just be -- Pat, from a manufacturing standpoint, are you doing anything going forward to make sure you're maybe manufacturing under class III protocols, and you would be able to upgrade, let's say, the next-generation system that will be integrated with G5 to a G6 with just a software push or anything? Any changes there on the manufacturing front that will kind of facilitate these upgrades over time?

Yes, very good question on the PMA requirements. I am very familiar with PMA requirements. My previous company was -- we got four PMAs approved in 23 supplements. So very much up to speed on what the requirements are. Mike -- Michael Spears, our VP of Quality, has a goal this year to provide a plan that we will start implementing next year to get all of the quality systems up to PMA standard in time for the launch of the -- in of time for the FDA inspection of the facility as well as the quality system to be able to launch the AP system on time. So we know what we need to do, and we've got to put in a plan in place to do it. And we'll just make it happen.

And in terms -- I think you asked about the AP milestones. Our IDE, as I mentioned, the on-body trial is our first IDE. And we expect to be entering that later on this fall. We're very excited. We've got a terrific group of investigators, really the best of the best, working on this with us. So we're excited about being able to make quick progress there. And in terms of functionality of our system, we don't want to give too much away, but I think I have said to you before that we definitely will have more than predictive low glucose suspend. We're not anticipating taking that sort of incremental step. We really want to bring value to the market when we launch. So that's our goal.

Our next question comes from the line of Kyle Rose from Canaccord.

I echo the sentiments on the strong quarter, so congrats on that. Just one quick question; a lot has already been asked. But wondered if you could talk through some of the initiatives that you are doing to drive the improvements in retention in the underlying installed base? I understand the focus on the new patients in the beginning, but kind of walk us through how the installed base is different from a longer-term perspective, and what you as a company can control and try to help improve those retention rates?

Sure. There are, really, I think, two primary things that drive retention. And probably the most important driver that we can control is the product quality and our product experience. So a lot of our efforts are focused on ensuring that -- you know, the product quality and product experience have, one, to do with product quality; and then, second, to do with how competent and confident the user is in managing with their OmniPod. The things like the Podder platform, the app, and some marketing -- ongoing marketing, communications, and support that we have to our user base help with the competency and comfort level of the users. And then, as Pat has mentioned many times, we just have a tremendous cross-functional Company focus on product quality and the customer experience that comes from product quality. So we've made great strides on that. I think both of those two things are the main things driving retention. The other piece is market access. So as we gain in Medicaid and even Medicare, when that comes, all of that will help us also continue to improve attrition of the broader installed base -- I mean, retention, rather, of the broader installed base.

Just one other one, just to circle back on the sales and marketing within OpEx, I understand that you made a lot of investments last year ahead of when you're expecting those revenues to flow through. We are obviously seeing that in the first half. But just when you think about the number in the Q2 here, should we consider that a floor and a base to move from moving forward? Or is there anything one-time in nature that we should -- that would change how we think about sales and marketing line in this quarter?

This is Mike. There was nothing unusual in the numbers in the quarter. There weren't any unusual expenses or favorability. So I think that it's a fair run rate, but what I would say is there are a number of investments that we are making in terms of new product development. Shacey talked about a number of areas that we are very excited about, and with Bluetooth pods, and the concentrated insulin, and everything else. So there's a good amount of expense that can be variable in nature, depending on the timing of work performed on some of those key projects. So we do expect that there will be continued expense as we go through the year and continued investment. But no, there were no unusual items in the quarter.

Our next question comes from the line of Mike Weinstein from JPMorgan.

We covered a lot of ground. I just wanted to make sure I understood the product that you're planning to introduce at ADA next year. You talked about just the upgraded connectivity. Could you just spend a minute on that, Shacey? Thanks.

Sure. And we'll give more color -- we're planning to give a lot more color at the investor day in November. But what this system involves is a Bluetooth PDM, a Bluetooth pod, and an app that would reside on the user's mobile phone. And that app -- we call it internally our PDM app. So it would display key information from a user's mobile phone, like insulin on board, like last bolus. And that app would integrate with Dexcom's app in order to provide integration of G5 data as well. So what we've heard loud and clear from our users is they want more functionality and more data on their phone. This system will provide that. And the Bluetooth platform gives us a lot of opportunity for continuing and hopefully accelerated product development as we look over the horizon. So we view this Bluetooth platform as a platform for our artificial pancreas and also, frankly, as a platform for our artificial -- I'm sorry, our concentrated insulins launches as well. So I will give you more detail on kind of the specifics of the features of the product in our investor day and as we progress towards the end of the year.

We have a follow-up question from the line of Doug Schenkel from Cowen and Company.

Going back to OpEx, we don't have the exact depreciation number yet, but it does appear as though you were EBITDA-positive in the quarter. Is it fair to expect that that trend will continue through the rest of the year? Thank you.

This is Mike. As I said, in terms of -- so we talked about our revenue growth for the year, and we've talked about our expectations of gross margin. On the OpEx side, we do expect to be making additional investments through the remainder of the year. We're really excited about our outlook going forward and want to make sure, as we did last year when we decided we were going to make some key investments to drive the growth in the top line, growth in gross margin, ultimately our pathway to profitability, that we will continue to be doing that. So there are a number of initiatives that we've talked about on this call and we've talked about the past, and there is some timing of those things. And so I do expect that there will be continued investment through the latter half of this year. But we're very pleased with our direction in EBITDA, and we're very pleased with our direction in the pathway to profitability.

I'm showing no further questions at this time. I would now like to turn the conference back to Pat Sullivan.

Thank you, operator. Let me just finish where I started. I am just absolutely thrilled with the progress and the performance of the Company during the last quarter. We are starting to show the impact of all the investments we've made. I must admit, however, that it hasn't been easy. But it's been accomplished by a dedicated team of talented individuals working from dawn to dusk to accomplish our objectives. We have a tremendous opportunity before us but significant work to do. So I'd like to end with a big thank you to all Insulet employees for a terrific job well done. Thank you. We'll talk to you in 90 days.

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