Insulet Corporation — 2024 Q1

Maybe just to start with kind of a big picture question. 2024 certainly seems like a year probably as active as you guys have been with new launches with an eye maybe towards 2025 acceleration in revenues as the new patient starts to accelerate in the back half of this year. So one, I guess, is that how you guys are thinking about it? And then two, is it too forward to think that as new patients start to accelerate in the back half, those can add a step change in new start growth? Or is it going to be more of a steady acceleration as you launch all of these different initiatives in the back half of this year?

Thanks, Margaret. Great question. We think that the timing of the product launches is really critical to ramping over the course of the year in '24. And so that's why we're really excited to be in LMR and be able to say that we anticipate full release of G7 in the U.S. over the summer and to already be in LMR going really well with our sensor of choice offering with -- including the Libre 2 Plus in Europe. And we do think that both new customer starts continue to accelerate over the course of the year and revenue continues to accelerate, and we'll see the revenue results more strongly in the second half.

I think there's a bunch of things. And let me start with the stocking question and then come back to the competitive question. So stocking, we're only ever going to call that out if there's something unusual. And channel -- the stock in the channel is back to normal. We don't see anything unusual happening, and we're not going to talk about that unless we ever see something change that we think changes the trend or whatever. So that dynamic is totally ordinary in the quarter.

Thanks, Jeff. Great question. We are really excited about the opportunity for AID in the type 2 market. And as we know, we're already the clear leader in that market with Omnipod DASH. So in the pump market with Omnipod DASH, very clear leader. And you all know we don't promote Omnipod 5 because we don't have the label. So we don't promote Omnipod 5 in the type 2 market. But it gets written off label fairly frequently, as you can kind of reverse engineer out of our numbers.

Yes, Michael, thanks for the question. It's our intent to show data from the STeP trial at ADA and with a specific focus on showing the subset analysis of people who are on GLP-1s in that data. Yes.

Travis, this is Ana. Thanks for the question. I think the main point here is to take a step back, and as you look at the U.S., we not only reaffirmed our full year guidance. We actually are taking up the low end. And as I mentioned in my prepared remarks, as we have all these cascade of new product launches, both in the U.S. and international, we're making assumptions. And as we do that, the key here is to remember that we believe the second half will be greater growth than the first, but we continue to expect the growth. And I think to call the exact timing is we're giving our best estimate. But the key important thing is that we're raising overall guidance for revenue, including international and the low end in the U.S.

Thanks, Larry. Year-over-year in Q1, overall new starts were not up, but MDI was up for us. So that gives you a sense of our strength in bringing customers out of MDI into the market. We expect sequential growth over the course of the year in new customer starts in the U.S. As I said before, I expect a record for us in the U.S. and globally in NCS for 2024. And what was the last part of your question, Larry?

Thank you very much. So G7 will be a tailwind for us once we get to full market release because of the nature of prescriptions, new customer prescriptions for CGM in the U.S. market. So I know you all look at this. But if you go look at new customer scripts for CGM, G7 has overtaken G6. And so you guys have always used -- heard me use this metaphor of fishing in a stocked pond. We've done obviously very, very well fishing in the G6 pond and have led the new starts with G6.

Thanks, Patrick. It's a great question. That's part of the purpose of the commercial pilot, is to get out in the real world and see how those practices operate because historically, our call point has been endocrinology practices. And so we're out calling on primary care and specifically on primary care who, when you look at their scripting behavior overall with things like CGM and insulin, look more like endo practices than like true general practices, right? And so we've been out in the world calling on those practices to see how they manage patients, how they manage diabetes therapy. And we've learned a lot.

Thanks, Matt. We think that you can see the normal cyclicality in the market, but the market is growing, first. And there's 2 drivers of market growth. The first one is the widespread adoption of CGM. And the second big driver of market growth is Omnipod 5 because it makes it so simple to come on to AID. And so as we continue to lead in MDI with a very clear leadership in the MDI position, those MDI patients are market growth for AID, and we are leading the way there. So the technology itself is driving market growth, and our CGM partners are doing it, and we're leading the way in AID.

This is Phil on for Matt. And just to circle back to Travis' question from before because I'm not sure that was explicitly clear as it relates to Q2. For total Omnipod, can you confirm that Q2 growth will be sequentially up if you back out this wholesaler dynamic? And then just for some who are listening who might not be familiar, can you talk about the fact that G6 pods are different than G7 pods?

Let me start on the pods, and then I'll ask Ana to comment, go back to the Q2 financials. So the G6, G7 pods, when we get to full release of -- for the G7 integration. Those will be backwards compatible pods. So the current pods only -- can only connect with G6. But when we launch G7, the G7 pods will be G7 and G6 pods and be backwards compatible. So what that will mean for a customer or a user is that if they want to stay on the G6, they'll be able to stay on the G6 because the pods will work with it, but it will also accept G7. And so it will be kind of a sensor of choice within the Dexcom family of CGM. Ana, do you want to take the...

Sure. Listen, I'll take another stab at here the 2Q guidance. And I just -- once again, I want to put it in overall perspective for the year. We're taking up our guidance in the U.S., even in the low end. And we expect overall that sequential growth to be there, as I stated. And I think the key point to mention here is we made our best assumption here as we have this transition of product out in the market. And we called our best estimate, and we will update as we progress through the year. But we feel very confident over the entire calendar year with the guide we've given.

Thank you for the question. Listen, as I mentioned here, we took the entire guidance up 500 basis points, and that's given what Jim referred to. I mean the adoption we're seeing on Omnipod 5 is phenomenal and great. We're going to be in more markets as well. And the markets -- all of these European markets have slightly different dynamics. Some of them are in 4-year cycles, so on and so forth.

Sure. We don't -- as you know, Steve, we don't give guidance on actual numbers and so on. But we did try to allude, I think, in the prepared remarks to the fact that Omnipod 5 is out of the gate so strong in the U.K. and Germany that already in Europe, more than half of our new customer starts are Omnipod 5. So that will give you some color on the strength of the adoption. We'll launch in France over the summer. And then the France -- we're in Netherlands in LMR, and we'll get to FMR in the Netherlands, and then we'll launch in France over the summer. And there's a ramp, as you all know, to the dynamic.

Thanks, Joanne. Libre 2, we're very excited. As you can imagine, we're very excited to get our Libre 2 integration into market in LMR. So far, we're having great results with the patient experience in both the U.K. and the Netherlands. And as you know, the Libre 2 form factor, that sensor for our partner, Abbott, is their most adopted sensor. And so it opens up an entirely new kind of side to the market for us, kind of serviceable addressable market, if you want to think in those terms of all of those Libre 2 users who may, therefore, also want to go on to an AID system in Omnipod 5. And Omnipod 5 is so simple to use, and the form factor is so great that we think it will have very high appeal to that Libre 2 user population. So we're very, very excited to get it out to market. Great to see the early results.

Yes, it's a great question, Danielle. The first thing I would say just quickly is, on the 85-15, that was actually a pretty subtle shift in mix. That is a mix percentage, and it was fairly subtle. And we tend to give you guys -- we have an estimation on that. We don't have perfect insight into those mix data that we give on MDI versus competitive T1, T2. There's kind of an estimation range in those. And so I wouldn't over-index on the modeling in what we reported. It was a pretty subtle shift.

Thanks, Bill. We haven't given timing on Omnipod GO. And obviously, we haven't yet filed Omnipod 5. And so the commercial pilot is intended to make sure that we have enough learning in place to put the right commercial model in place. And we'll figure out exactly how we'll bring the portfolio. So we have not updated on timing for Omnipod GO, but you can -- I think you can easily envision that with a portfolio of products, the commercial model looks different than with a single product, right? So I'll put it that way, I think.

Yes, this is Ana. Thanks for the question. We're in a really strong position as we look at our operating margin. And I'll break it down. From a gross margin perspective, we did that 69.5%. That's very strong. We look to have strength on that as we progress through the year. Now from an operating perspective, what we need to balance out here is the investments because we want to really position ourselves into the future. And as Jim and I have talked, it is kind of a good problem to have. And we have a cadence around analyzing our investments and making sure there's that rigor of those returns.

Yes. Great question, Chris. Yes, obviously, we'd be speculating. So just to -- and we'll be publishing an update that we'll give you one more detail. So I don't want to steal the thunder of what we'll put out. So you can also look at the slides, and we can have a better conversation about it. But I'd just say we'd have to speculate what's actually happening. It's -- the analysis is based on claims data. And so it's very robust. It's very large end claims data. And what it shows is that for those patients who adopt GLP-1, they are much more likely to also adopt insulin in the same year.

This is Brett on for Mike. Just wanted to go back to the guide, I guess, on the high and the low end in particular. What are some of the assumptions in terms of just the G7 launch like? Does it take a certain time in the summer that that's going to launch to hit the high end of the guide or the midpoint of the guide? Or is there anything that we should be thinking about in terms of timing there? And then with that, just overall attrition and then the timing of the France launch as well, if there's any swing factors there in the OUS guide.

All right. There's a few questions here, and maybe we'll tag team here between Jim and I. Let me take the guide first. Listen, it goes back to the fundamental. First and foremost, we're increasing our revenue guide. Second point in terms of timing, we are absolutely assuming that as we put the new G7 pods into our channels, there's going to be a reduction of the G6 as it gets sold through the channel. So there is a destocking of that G6, and we have an assumption there, I'll call it, roughly in the $10 million or so.

France launch.

So I'll start. As we've said, the timing of the France launch will be here over the summer. And the teams are ready. They worked out all the pricing, and they're working all the sales force and everything. So we expect, as we mentioned, that every country is slightly different. In France, there tends to be more of this 4-year cycle of contract renewals as people might have been previously in pumps and so on. So we are assuming in our financials more of that uptick into the later half of the year, very -- like later into the year as it ramps and it takes time but really being a tailwind for us in 2025.

Thanks, Josh. Really, really good question, and it's something we could have a very complicated conversation about, right? But the very simple answer from our point of view is that what's unique about pharmacy access for Omnipod 5 is that the product fits the channel really, really well. And tubed pumps are durable equipment, and they don't fit the channel very well. So as anybody trying to enter the market and get into the pharmacy channel with some sort of durable equipment plus some consumable thing, it will be very difficult.

Thanks, operator. In closing, we're off to a great start in 2024. We're transforming diabetes care globally with Omnipod 5, which now also includes our limited commercial launches with G7 in the U.S. and with G6 and Libre 2 Plus internationally. We've got a very strong market leadership position, the right product portfolio to address the needs of both the type 1 and the type 2 global markets and a clear and focused strategy to drive continued growth leveraging our significant competitive advantages.