SecProbe.io

CORRESP
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corresp

September 13, 2010

United States Securities and Exchange Commission

Division of Corporation Finance

Mail Stop 3030

100 F. Street, N.E.

Washington, D.C. 20549-6010

Attention: Mr. Kevin Kuhar

Re: Insulet Corporation

Form 10-K for the Fiscal Year ended December 31, 2009

Filed March 9, 2010

Amendment No. 1 to Form 10-K filed August 9, 2010

Form 10-Q for the Fiscal Quarter ended March 31, 2010

File No. 001-33462

Dear Ladies and Gentlemen:

This letter is being furnished on behalf of Insulet Corporation (the “Company”) in response to
comments in the letter dated August 27, 2010 (the “Letter”) from the Staff (the “Staff”) of the
Securities and Exchange Commission (the “Commission”) to Brian Roberts, Chief Financial Officer of
the Company, with respect to the Company’s Form 10-K for the Fiscal Year ended December 31, 2009
that was filed March 9, 2010 and the Company’s Form 10-Q for the Fiscal Quarter Ended March 31,
2010.

On September 1, 2010, we responded to Comment No.1. In this Letter, we are now responding to
Comment Nos. 2-4.

To facilitate your review of our response, we have repeated in full your comments in italics below.

Amendment no. 1 to Form 10-K for the Fiscal Year Ended December 31, 2009

Note 16. Restatement of Previously Issued Financial Statements,, page F-23

    2.

    We note that on August 4, 2010, you filed an Item 4.02 Form 8-K announcing that your
financial statements for the fiscal year ended December 31, 2009 and fiscal quarters ended
September 30, 2009 and March 31, 2010 should no longer be relied upon and subsequently filed
amendments to your Form 10-K and March 31, 2010 Form 10-Q. You determined that the September
2009 amendment to your Facility Agreement which was originally accounted for as a debt
extinguishment should have been treated as a loan modification. Please respond to the
following:

    •

    Describe for us in detail how you originally accounted for the debt
extinguishment and how you subsequently determined loan modification treatment was
appropriate.

    •

    Tell us why you concluded that no amendment to your Form 10-Q for the fiscal
quarter ended September 30, 2009 was required to be filed.

RESPONSE: In March 2009, we executed a debt agreement with Deerfield Partners (“Deerfield”) to
provide us with up to $60 million in debt financing. In September 2009, we sold shares of our
common stock to Deerfield, repaid in full the initial amount borrowed and amended certain terms of
the debt agreement. In the table below, we highlight the key terms between the original and
amended debt agreements.

    Original

    Amended

    $60 million facility with $27.5
million drawn down upon signing.
Remaining $32.5 million to be made
available in tranches of $6.5
million each as certain performance
milestones were achieved.

    Sold 2.84 million shares of our
common stock to Deerfield at a price
per share of $9.68. Repaid the
initial $27.5 million drawn from the
$60 million facility. Drew down
remaining $32.5 million immediately
with no associated performance
requirements.

    Warrants to purchase 3.75 million
shares of our common stock initially
granted upon signing at $3.13 strike
price.

    No additional warrants issued upon
signing of amendment

    Interest: 9.75% on drawn amounts;
2.75% on undrawn amounts

    Interest: 8.5% on drawn amounts; no
undrawn amounts remaining

    Issuance of warrants to purchase
300,000 shares of common stock for
each additional $6.5 million drawn
(maximum of 1,500,000). Warrants to
be priced based upon 20 day weighted
average upon notice by Company of
desire to draw down a tranche of
funds.

    No warrants associated with draw of
$32.5 million. The warrants to
purchase 1.5 million shares of our
common stock that would have been
issued under the original facility
were eliminated.

    Amounts can be repaid at any time
prior to September 2012

    Prepayment penalty of up to 5% of
principal based on timing of
prepayment

At the time of the modification we considered the guidance in ASC 470-50-40 (formerly EITF 96-19,
“Debtor’s Accounting for a Modification or Exchange of Debt Instruments”). We performed a
calculation considering the change in the present value of the cash flows and determined that the
change in the present value of the cash flows under the terms of the amended debt instrument was
greater than 10% from the present value of the remaining cash flows under the terms of the original
instrument. Accordingly, the debt was considered to be extinguished, and we recorded a charge of
approximately $7.6 million in the period ended September 30, 2009

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to write-off the remaining debt discount and issuance costs related to the original debt on the
balance sheet to interest expense.

In June 2010, we entered into a second amendment with Deerfield to modify additional terms of the
debt agreement. While finalizing the accounting for this amendment in connection with the filing
of the Form 10-Q for the quarter ended June 30, 2010, we revisited the calculation from September
2009 and determined that we did not appropriately consider the present value of the cash flows for
the original and amended debt arrangements under various prepayment scenarios as required by ASC
470-50-40-12 c. The calculation used to determine the change in present value of the cash flows
under the amended debt arrangement compared to the original debt arrangement, including the
effective interest rate, was not correct. Therefore, we revised the present value calculations for
the various prepayment scenarios utilizing the appropriate interest rates and determined that at
September 2009, we did not have a change greater than 10% in the present value of the remaining
cash flows in all scenarios. As such, the first amendment should have been treated as a
modification of the original debt and not as an extinguishment of debt. Under the terms of a debt
modification, the debt discount and related issuance costs incurred in the original borrowing as
well as any additional debt discount and related fees related to the amended borrowing should be
amortized to interest expense over the remaining term of the debt agreement.

As a result, we should not have recorded the $7.6 million debt extinguishment charge in the period
ended September 30, 2009. Rather, the discount will continue to be amortized to interest expense
over the remaining term of the amended debt agreement. In addition, we initially recorded a $1.8
million discount on the shares sold in September 2009 in connection with the repayment of the
original borrowings as a discount on the equity issued. In accordance with ASC 470-50-40-3, the
equity issued should have been recorded at its fair value and the $1.8 million in excess of the
amount of debt that was legally discharged has now been recorded as additional discount on the
modified debt and will be recognized as additional interest expense over the life of the amended
loan.

We performed an analysis of materiality considering both quantitative and qualitative measures for
the periods impacted from the date of the amendment. The periods considered included the quarter
ended September 30, 2009, the full year ended December 31, 2009 and the quarter ended March 31,
2010. For each period, we determined that the error was material to the financial statements. On
August 9, 2010, we filed an amended Form 10-K/A for the year ended December 31, 2009 and an amended
Form 10-Q/A for the quarter ended March 31, 2010. The 10-K/A included all financial information
required to be restated related to the three and nine month periods September 30, 2009.

As noted in our Form 8-K filed on August 4, 2010, we determined that the previously filed financial
statements for the quarter ended September 30, 2009, the year ended December 31, 2009 and the
quarter ended March 31, 2010 should no longer be relied upon. Accordingly, on August 9, 2010, we
filed an amended Form 10-K/A for the year ended December 31, 2009 and an amended Form 10-Q/A for
the quarter ended March 31, 2010. The Form 10-K/A filed to amend the 2009 results included the
restated amounts and disclosures for both the quarter ended September 30, 2009 (unaudited) as well
as the year ended December 31, 2009. Once the

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Form 10-K/A was filed, we are no longer required to incorporate by reference our Forms 10-Q for the
quarters ended March 31, 2009, June 30, 2009 or September 30, 2009 into any subsequent filings. In
addition, we reviewed recent amended filings of other SEC registrants including athenahealth, Inc.
and GSI Group Inc., and noted that their Forms 10-K included the disclosures relating to the
restated quarterly periods. Neither registrant filed amended Forms 10-Q for these restated
quarterly periods. We believe that since we included the complete restated disclosures for the
quarter ended September 30, 2009 in the Form 10-K/A, it was unnecessary to file an amended Form
10-Q for the quarter ended September 30, 2009.

Form 10-Q for the Quarterly Period Ended June 30, 2010

    3.

    We note your response to our prior comment 3. In addition to resolving any comments we may
have to your confidential treatment request for Exhibit 10.1 to your Form 10-Q filed May 7,
2010, please ensure you have resolved any comments we may have to your confidential treatment
request for Exhibit 10.1 to your Form 10-Q filed August 9, 2010.

RESPONSE: In response to the Staff’s comment, we have spoken with the Staff and are in the process
of revising our amended and restated confidential treatment request which was submitted on July 22,
2010 and Exhibit 10.1, which we had filed on Form 10-Q filed on May 7, 2010, and we plan to submit
a further amended and restated confidential treatment request and file a revised Exhibit 10.1 on
Form 10-Q/A with the Commission by September 17, 2010 as discussed with the Staff. As of the date
of this letter, we have not received any comments from the Staff with regard to our confidential
treatment request for Exhibit 10.1 to our Form 10-Q filed on August 9, 2010. If we receive any
comments from the Staff, we will respond to them promptly.

Note 1. Nature of the Business, page 6

    4.

    You disclose that you shipped product to your distributor but you have not recorded any
revenue. Please tell us the significant terms of your distribution agreement with Ypsomed and
explain how you are accounting for the agreement.

RESPONSE: On January 4, 2010, we entered into a distribution agreement (the “Agreement”) with
Ypsomed Distribution AG (“Ypsomed”) pursuant to which Ypsomed becomes the exclusive distributor of
our OmniPod Insulin Management System (the “OmniPod System”), with the right to promote, advertise,
market, distribute and sell the OmniPod System in Australia, Belgium, China, Finland, France,
Germany, Norway, Sweden, Switzerland, the Netherlands and the United Kingdom.

Significant Terms

    •

    Ypsomed has agreed to make minimum annual purchases of the OmniPod System. The remedy for
Ypsomed’s failure to satisfy the applicable minimum purchase requirements is generally to
convert Ypsomed to a non-exclusive distributor or, in certain circumstances, to terminate the
Agreement.

    •

    We are responsible for supplying Ypsomed with product ordered via written purchase order at
the fixed prices specified in the Agreement.

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    •

    Payments are due from Ypsomed within 45 days from the date of the invoice.

    •

    Ypsomed has the right to set its own price to the customer.

    •

    Shipping terms are EXW (Incoterms 2000) at a facility designated by us in China or
Massachusetts.

    •

    Ypsomed has also agreed to refrain from manufacturing, selling or distributing any other
insulin infusion devices which adhere to a user’s skin. It is expected that the version of the
OmniPod System distributed by Ypsomed will be co-branded with Ypsomed’s MYLIFE diabetes care
brand.

    •

    Term of five years.

    •

    Fifteen months prior to the end of this term, the parties have agreed to negotiate in good
faith to enter into an amendment to the Agreement which would include a renewal term.

    •

    Upon termination or expiration of the Agreement, we have agreed to pay certain
termination/expiration fees. These fees would be based on sales of our products made during
the twelve months following such termination or expiration to customers who had purchased our
products from Ypsomed during the term of the Agreement. Upon determining that a termination
or expiration of the Agreement is probable, we will accrue the estimated fees.

    •

    Subject to certain conditions, we have granted Ypsomed a right of first refusal relating to
distribution rights in all other countries except the United States, Canada and Israel.

    •

    Under the Agreement, Ypsomed has no rights of return, stock balancing rights or price
protection rights. Customers are provided with warranty rights commensurate with the
warranties provided to customers in the United States.

Accounting

As disclosed in Note 1 to the Financial Statements, we recognize revenue from sales to distributors
based on the revenue recognition criteria of Staff Accounting Bulletin 104 “Revenue Recognition”
(“SAB 104”). Specifically, we recognize revenue at the time all of the following criteria are met:

    •

    Persuasive evidence of an arrangement exists

    •

    Delivery has occurred

    •

    Fees are fixed and determinable

    •

    Collection is reasonably assured

As there are additional complexities in transactions with distributors, we consider the following
additional factors relating to these sales.

    •

    Whether the arrangement contains extended payment terms

    •

    Whether the payment terms coincide with the reseller’s sales to end customers

    •

    Whether collection of the fees associated with a reseller arrangement can be assessed as
probable

    •

    Whether uncertainties about the potential number of delivered products that will be resold
indicate that the amount of future returns cannot be reasonably estimated pursuant to the
provisions of the rights of return guidance

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    •

    Whether an arrangement with a reseller includes return, exchange, or stock balancing
rights.

    •

    Whether a reseller arrangement requires a vendor to rebate or credit a portion of an
arrangement’s fee if the vendor subsequently reduces its price for a product and the reseller
still has rights with respect to that product (price protection rights)

    •

    Whether a vendor has induced a reseller to buy more product than can be promptly resold

    •

    Whether the arrangement includes either explicit or implicit commitments by the vendor to
assist the reseller in reselling the product

    •

    Whether a transaction is complex, involving both a reseller and an end customer

    •

    The reseller’s bargaining strength

    •

    Other characteristics such as the vendor’s past business practices, the reseller’s
operating history, competitive pressures, the environment of the geographic location of the
reseller and side arrangements and informal communications

Each shipment to a distributor is evaluated against these criteria and once all conditions are met
and complexities identified, revenue is recognized.

In regards to our international distributor, Ypsomed, we made our initial shipment of product for
resell to Ypsomed on June 30, 2010. At the time of shipment, we deferred the revenue and related
cost based on our consideration of the facts and circumstances of the transaction. The total value
of the shipment was less than $300,000. Had this revenue been recognized in the second quarter of
2010, it would have represented approximately 1% of our revenue for the quarter. We made the
determination to defer the revenue and associated costs based upon our review of the transaction
against the four criteria and other considerations noted above.