The operator introduces the Insulet Corporation First Quarter 2024 Earnings Call and reminds participants that the call is being recorded. Deborah Gordon, Vice President of Investor Relations, is hosting the call and is joined by CEO Jim Hollingshead and CFO Ana Maria Chadwick. The replay of the call, press release, and supplemental earnings presentation will be available on the company's website. Certain statements made during the call may be forward-looking and non-GAAP financial measures will be discussed. These measures are used by management to assess performance and are believed to be helpful to others as well.

Insulet had a successful first quarter in 2024, with strong revenue growth and margin expansion. The company's global team executed well and exceeded expectations in all product lines. They have increased their guidance for top line and operating margin growth. The CEO discussed the company's Q1 results, their innovation agenda for the year, and their efforts to capture the value of scale. Their Omnipod 5 automated insulin delivery system remains the market leader in the U.S. with high demand and robust new customer starts.

Omnipod 5 is driving market growth and is the top choice for people with type 1 or type 2 diabetes. It has been successful in converting users from multiple daily injections and has exceeded expectations in international markets. The company is raising its revenue outlook due to the success of Omnipod 5. The product is highly differentiated and offers ease-of-use, affordability, and widespread access. The company is continuing to innovate and improve upon the initial version of Omnipod 5.

In 2024, we will expand on the Omnipod 5 platform by launching it in new geographies and integrating with new sensors, such as Dexcom's G7 and Abbott's Freestyle Libre 2 Plus. We have already entered limited market release in the U.S. and Europe, with promising results. We will also be launching Omnipod 5 in France this summer, ahead of our initial expectations. These international launches are expected to drive accelerated new customer starts and revenue growth in the second half of this year and beyond.

Insulet Corporation is planning to release their iOS app for the Omnipod 5 this summer, which has been highly requested by customers. They are also focusing on the type 2 diabetes market, with a commercial pilot for Omnipod GO and plans to expand their reach based on learnings from the pilot. They have also reached a key milestone in their secure T2D pivotal trial and are on track to submit for FDA clearance by the end of the year. Once cleared, they expect to see increased adoption of Omnipod 5 among the 2.5 million people with insulin-intensive type 2 diabetes. They are also analyzing the impact of GLP-1 use on insulin adoption in this market.

The company is confident in the potential for growth in their type 2 diabetes portfolio and is finalizing their analysis. They have a strong market position with broad reimbursement and nationwide distribution. Their strategy to increase awareness has led to an increase in healthcare providers prescribing their products. They are also expanding their commercial reach and investing in market access capabilities. In the US, they are expanding their salesforce and targeting pediatric centers.

Insulet has strong sales, marketing, and channel capabilities that allow them to reach a large and growing population of patients. They also benefit from their scaled manufacturing, with a new facility in Malaysia expected to increase efficiency and lower costs. The facility will also support international market expansion and is expected to be accretive to gross margin in its first year of production. Insulet's advantages in scope and scale give them the ability to invest in growth and expand margins. They have also recently appointed a new CFO, Ana, who is a highly accomplished and proven leader.

Insulet is pleased to welcome Ana Maria Chadwick to their team and is confident in her ability to help drive growth and strengthen their financial profile. The company had a strong first quarter, with 23% revenue growth driven by global Omnipod sales and stable retention and utilization trends. The U.S. saw a 23% growth in Omnipod revenue, fueled by strong adoption of Omnipod 5 integrated with G6 and the launch of the U.S. limited market release with G7. The full market release of G7 is expected to accelerate new customer starts in the second half of the year.

Revenue growth for the company has been strong, driven by the success of Omnipod 5 and high demand. International revenue saw a significant increase, with Omnipod 5 launches in the U.K. and Germany driving new customer starts. Gross margin also increased due to volume growth and improved manufacturing efficiencies. Operating expenses increased due to investment in the business, but the company remains committed to expanding operating margin. Cash and liquidity are in a strong position, with $750 million in cash and $300 million available under the credit facility.

The company's efforts to drive profitable growth have resulted in expanding margin and a stronger financial profile. They are raising their expectations for total Omnipod and total company revenue growth for 2024, with a focus on strong adoption of Omnipod 5 and planned release of Omnipod 5 with G7 this summer. They also expect to accelerate new customer starts and revenue growth in the second half of the year, with a focus on penetrating the type 2 market. International Omnipod revenue expectations have also been raised, driven by last year's Omnipod 5 launches in the U.K. and Germany.

The company is revising their revenue growth outlook for the first half of 2024 due to strong momentum internationally and the launch of Omnipod 5. They expect quarterly revenue fluctuations due to product launches, but do not anticipate it will impact their full year outlook. The company is reaffirming their gross margin expectations for 2024, but remains committed to driving further expansion in the near and long-term. They also have an increased commitment to driving operating margin expansion through investments in R&D and commercial launches.

The company is raising its operating margin expectations to 13.5% due to changes in income distribution among its jurisdictions. They may also release a valuation allowance against their deferred tax assets, resulting in a $200 million reduction in income tax expense. For the second quarter of 2024, they expect total Omnipod growth of 18-21% and total company growth of 15-18%. They also expect growth in U.S. Omnipod due to the adoption of Omnipod 5 and strong new customer starts. International Omnipod growth is expected to be 12-15%, with a negative impact from foreign currency. Q2 drug delivery revenue is estimated to be $4-5 million.

The company's first quarter results reflect successful execution of their strategy and strong customer starts. The CEO is impressed by the company's accomplishments and sees even greater opportunities ahead. They are well-positioned for sustained revenue growth and margin expansion. In the upcoming years, the company plans to launch new products and expects to see an acceleration in revenue growth in 2025 as new patient starts increase. The timing of the product launches is key to this growth.

The speaker discusses the company's confidence in their competitive position, with strong results in new customer starts in the first quarter in the U.S. and Europe. They also mention that stocking in the channel is back to normal and there were no unusual dynamics in the quarter.

In the U.S., the majority of the market for type 1 diabetes is still on MDI, but Insulet's Omnipod 5 technology is designed to convert patients to their product. They have a strong leadership position in MDI and are also the net winners in competitive switching in the remaining 40% of the market. They feel confident that Omnipod 5 will be successful in all areas. The next question is about type 2 diabetes.

The speaker is excited about the potential for their company's product, Omnipod 5, in the type 2 diabetes market. They are currently the clear leader in the pump market with Omnipod DASH, but they are unable to promote Omnipod 5 in the type 2 market due to lack of FDA approval. However, they are close to filing for a label extension and are confident that this will drive significant growth in the use of Omnipod 5 in the type 2 market. The pivotal trial for Omnipod 5 has completed enrollment and the last patient has gone through the trial.

Management is confident in the progress of the company's FDA filing and expects to file by the end of the year. They believe the Omnipod 5 offering will be successful in the type 2 market due to its ease-of-use and availability in pharmacies, and plan to present data from the SECURE trial at ADA. The Q2 guidance is expected to show sequential growth, but this will be offset by wholesalers taking down G6 inventory. They did not provide a specific quantification of the impact of the G6 inventory on the Q2 guidance.

Ana, the speaker, discusses the company's reaffirmed guidance and raising of low-end expectations for revenue. They expect greater growth in the second half of the year and are seeing robust new patient starts in the U.S. for type 1 and type 2 diabetes. However, overall new starts were not up year-over-year in Q1, but MDI was up. They expect sequential growth and record numbers in new customer starts for 2024. The G7 integration is seen as a driver for this growth.

In the paragraph, the speaker discusses the potential impact of the G7 release on the company's growth. They mention that G7 has overtaken G6 in terms of new customer prescriptions for CGM and that it will be a tailwind for the company once they reach full market release. The speaker also talks about the importance of timing for the G7 launch and how it will drive more new customer starts in the second half. They also mention the company's focus on learning and investing in the type 2 market and the potential challenges of working with different patients and PCPs.

The company has been conducting a commercial pilot to learn more about how primary care practices manage diabetes therapy. They have found that their Omnipod platform is simple to use and often leads to a more comprehensive discussion about insulin delivery. They are using the insights from the pilot to design a better sales and support model for driving the type 2 market.

The speaker talks about how they are seeing an increase in interest for basal bolus solutions and DASH in practices, which presents an opportunity for Omnipod 5 and intensive insulin therapy. They also mention that there is a mix of type 1 and type 2 patients being treated in both endocrinology and primary care, and they plan to invest more in sales and support to capture this opportunity. The market for pumps is growing due to the adoption of CGM and the simplicity of Omnipod 5 for AID.

In paragraph 22, the speaker discusses the company's strong leadership in the MDI position and how this is driving market growth for AID. They also mention their partnerships with CGM companies and their role in leading the way in AID. In response to a question about Q2 growth, the speaker confirms that there will be sequential growth if the wholesaler dynamic is excluded. They also explain that G6 and G7 pods will be backwards compatible, allowing customers to choose between the two. The speaker then reiterates that the company is increasing its guidance for the year and expects sequential growth to continue despite the transition of products in the market.

The company is confident in their estimate for the entire calendar year and has increased their guidance by 500 basis points. They expect strong growth in international markets due to the adoption of Omnipod 5 and expansion into new markets. The team's philosophy is to give achievable numbers and they will update accordingly as they learn more about the launches. They have seen strong performance in new starts outside of the U.S.

In this paragraph, Jim Hollingshead discusses the success of Omnipod 5 in the European market and its impact on revenue. He mentions that more than half of new customers in Europe are starting with Omnipod 5 and that the company plans to launch in France over the summer. Hollingshead also notes that they have been able to negotiate a premium price for Omnipod 5 in European markets due to its new technology, which will have a mixed impact on revenue.

The speaker discusses the success of securing a premium for Omnipod 5 and the excitement for its integration with Libre 2. They also mention the potential market for Libre 2 users and the upcoming data presentation at ADA, including subset analysis and real-world evidence.

The company plans to report an update on their analysis of GLP-1 at ADA. They have seen in claims data that people who adopt GLP-1s are more likely to adopt insulin in the same year. The next question from an analyst was about new patient starts from competitive switches. The company had mentioned last quarter that one of their competitors was holding onto their installed base, but it's unclear if that has gotten worse. The company estimates that the mix of MDI versus competitive T1 and T2 is around 85-15, but this is just an estimation and shouldn't be over-emphasized. The company cannot speak to the challenges their competitors face in retaining customers in their installed bases.

The speaker discusses the company's success in converting customers from competitors with their Omnipod 5 product. They have implemented market analysis to better estimate their customer loss rate and have consistently been the net winners in the competitive switch game. The speaker also mentions the upcoming release of Omnipod GO and the commercial pilot for Omnipod 5, which will help determine the best commercial model for the product. The speaker also hints at the potential impact of the ATDD data on the market for AIDs.

The company has not provided an update on the timing for Omnipod GO, but they expect the commercial model to look different with a portfolio of products. The ATDD data shows that the Omnipod 5 algorithm is world-class and produces fantastic clinical results across age groups and demographics. The real-world evidence is from all users, making it extra robust. The data is helping the company in the field as they introduce Omnipod 5 to new users. The company also had excellent operating margins this quarter and expects incremental expansion of the salesforce. They are in a strong position and will continue to monitor the operating margin on a quarterly basis.

The company has seen strong gross margins and is focused on balancing investments for future growth. They are prioritizing increasing margins while also investing in salesforce and product features. The speaker addresses a question about GLP-1 use in type 2 diabetes and suggests that the use of GLP-1 may be accelerating the transition to insulin use, but it is unclear if this is due to the medication itself or increased engagement with the disease. More details will be provided in an upcoming update.

The speaker discusses the analysis of claims data related to the adoption of GLP-1 and insulin by patients. They speculate that patients may be put on GLP-1 due to high A1c levels and then also go on insulin to address the issue. The claims data shows a clear and striking dynamic, but the speaker cannot confirm what is happening in clinics. They also mention the G7 launch and potential timing and factors that may affect the OUS guide.

Insulet is increasing their revenue guide and assuming a reduction in their G6 product as the new G7 pods are introduced into their channels. The timing of this is uncertain, but they are focusing on the full year and the second half of the year. They also addressed the timing of the France launch, which is expected to be in the later half of the year and be a tailwind for them in 2025. In terms of the pharmacy channel, Insulet had exclusivity in getting patient access through their pharmacy benefit.

The speaker is responding to a question about potential risks to Insulet's reimbursement levels and model as competitors start to enter the pharmacy channel. They believe that the Omnipod 5 product fits the channel well and it will be difficult for competitors with durable pumps to replicate their scale and scope in the pharmacy channel. They also mention the ease of use and setup of Omnipod 5, which they believe makes it a good fit for the pharmacy channel. They do not see the same level of fit for competitors with durable pumps.

Jim Hollingshead is closing the conference and thanking everyone for their participation. He mentions the success of Omnipod 5 and the company's strong market position. He also mentions upcoming milestones and the team's dedication to their mission. The call ends with a thank you and a reminder to disconnect.

This summary was generated with AI and may contain some inaccuracies.