The Insulet Corporation is holding their second quarter 2024 earnings call, where President and CEO Jim Hollingshead and CFO Ana Maria Chadwick will discuss the company's results and guidance. A replay of the call and a press release will be available on the company's website, along with a supplemental earnings presentation. The company reminds listeners that certain statements may be forward-looking and will discuss non-GAAP financial measures.

In the second quarter of 2024, Insulet reported strong financial results, exceeding expectations and demonstrating their position as a leader in automated insulin delivery. The company has increased their full year guidance for revenue, gross margin, and operating margin. They also discussed their progress in expanding the Omnipod 5 platform globally and their success in capturing the value of scale across their business. In the U.S., they saw strong momentum in new customer starts and achieved sequential growth in Q2.

The company's strategy is to focus on bringing people off multiple daily injections and onto Omnipod therapy, leading to rapid growth in their customer base. They are seeing a trend of customers switching pump manufacturers at a lower rate, but they continue to be the net winner in competitive switching. The majority of their new customers come from people previously using MDI, and they are taking share from competitors. They have a competitive advantage in the pharmacy channel and are increasing awareness among prescribers. The company is the leader in Type 1 and remains the top choice for Type 2. They are anticipating FDA clearance for Omnipod 5 label expansion, which they believe will greatly increase their market opportunity.

In Q2, the company exceeded expectations in international revenue and new customer starts, leading to a 600 basis point increase in their international revenue outlook. They anticipate reaching $0.5 billion in annual international revenue in 2024 and are seeing strong demand for their Omnipod 5 with Dexcom's G7. The company has also launched multiple platform expansions and is pleased with the performance of their specialty pharmacy channel, which allows them to focus on new customers and meet increased demand.

Last week, existing Omnipod 5 customers received a free software update to pair their controllers and smartphones with G7. The company is allowing the inventory shift in retail outlets to progress naturally to minimize confusion and potential returns. The launch of Omnipod 5 iOS app with G6 is going well and early users are praising its convenience. The company plans to transition to full release in the fall. They also plan to launch Omnipod 5 integrated with Abbott's Freestyle Libre 2 Plus sensor by the end of the year.

Insulet is expanding its Omnipod 5 offering to reach customers in the US who use the Libre family of sensors. This expansion is expected to generate increased demand for Omnipod 5, as seen in international markets. The company has recently launched Omnipod 5 in France and plans to launch in other countries, with positive feedback from patients and healthcare professionals. Omnipod 5 is now available to the majority of customers in Europe, and the company plans to continue expanding globally. Insulet also sees potential for growth in the type 2 diabetes market.

The company is a market leader in the type 2 insulin delivery market and has seen a strong trend of new customer starts. They have identified multiple patient profiles and are expanding their sales force to better serve patient needs. They are also pursuing clinical work, including a pivotal trial with Omnipod 5 called SECURE-T2D, which showed promising results in reducing A1c levels in type 2 diabetes patients. The study was diverse and representative of the general population, making the results clinically relevant.

In a recent study, it was found that over half of the participants were using GLP-1 therapy and the results were consistent across all cohorts, regardless of whether they were on GLP-1 or not. Even those on basal-only insulin injections saw benefits without an increase in hypoglycemia. The study also showed a reduction in diabetes distress. Based on these results, the company has filed for FDA clearance to expand the use of Omnipod 5 for type 2 diabetes patients and will be focusing on this product in the future. This will replace the Omnipod GO offering for those on basal-only insulin therapy. The company is grateful for the patients and healthcare professionals who participated in the pilot and will support them in transitioning to other Omnipod therapies.

Insulet is confident in their new product, Omnicon 5, and believes it will be successful in the type 2 diabetes market. They expect to be the first to market with an automated insulin delivery offering for type 2 patients, and are excited to bring it to market by the end of the year pending FDA clearance. This will open up a new market for them and contribute to their growth. They have also invested in process innovation and a new manufacturing plant in Malaysia to increase margins and production capabilities.

Insulet's new, larger facility is expected to increase gross margin and meet the growing demand for their product. The company's global business is growing profitably and they are celebrating the grand opening of their new facility in Malaysia. In the second quarter, they saw 23% revenue growth and stable retention. The launch of Omnipod 5 integrated with G6 and the upcoming release of G7 are driving their strong growth.

The company's year-over-year US revenue growth was driven by expanding their customer base and increasing volume in the pharmacy channel, partially offset by a reduction in inventory due to the Omnipod 5 G6 to G7 transition. US utilization trends were slightly lower due to the significant ramp-up of Omnipod 5 in its first year of launch. The company's strong commercial execution and pricing benefits from channel mix contributed to the beat in revenue expectations. In the international market, the company saw a 24% growth in Omnipod revenue, driven by high demand for Omnipod 5 and recent launches in the UK, Germany, and France. The upcoming launch of Omnipod 5 Libre 2+ in two markets is expected to further drive growth.

In the international market, there was a slight increase in utilization trends, with foreign currency being a slight headwind compared to the previous year. Drug delivery revenue was higher than expected due to increased orders from a partner and improved production timing. Gross margin increased due to pricing benefits and manufacturing efficiencies, but there was also a one-time charge related to a strategic decision to focus on Omnipod 5 instead of Omnipod GO. Operating expenses increased but were lower than expected due to timing, and the company plans to continue investing in the business to drive above-market growth. Overall, operating margin and adjusted EBITDA exceeded expectations due to strong revenue performance and timing of expenses.

The company's expansion of metrics was partially offset by a one-time charge related to Omnipod GO. They released a majority of their valuation allowance, resulting in a non-cash tax benefit of $150 million. The company expects to recognize another $30 million during the remainder of the year. They successfully extended the maturity of their Term Loan B and repriced it at a lower interest rate, reducing cumulative interest expense by $17 million. The company is raising their expectations for total Omnipod revenue growth to 18%-21%, representing a milestone of $2 billion in annual revenue. They also raised their total company revenue growth to 16%-19%. The growth is expected to be driven by strong demand for Omnipod 5 and the recurring revenue stream from their annuity model.

The company is expecting a tougher comparison in the second half of 2024 due to accelerated orders in the fourth quarter of 2023. They anticipate higher revenue and new customer starts in the second half of 2024, but at a slower rate due to market reduction in competitive switching and longer facing period for G7 Pods. The company is confident in this strategy and expects it to maximize customer experience and limit returns. International revenue growth expectations have been raised due to the success of Omnipod 5 launches in the UK and Germany. The company's outlook for international business is strengthened by the success of Omnipod 5, resulting in a 1,100 basis point increase in their outlook since the start of 2024.

The company has received positive feedback for their advanced technology and expects their most recent product launch to contribute significantly to revenue in 2025. They have seen strong momentum internationally and anticipate further growth and market share gains. Quarterly revenue fluctuations are expected due to multiple product launches in 2024. The company's gross margin outlook for 2024 has improved and they expect to land closer to the high end of their range. They remain committed to driving operating margin expansion and are raising their guidance for the third time. For the third quarter, they expect strong growth in both their Omnipod and total company segments.

In the paragraph, the company Omnipod is expected to see a growth of 21-24% driven by demand for Omnipod 5, customer starts, and their immunity model. International Omnipod is also expected to see growth, but with a decline in foreign currency impact. The company also expects Q3 drug delivery revenue to be around $3-4 million. The company's global team is executing well and generating strong results. There were some clarifying questions about the gross margin and new patient ramp in the second half.

The speaker discusses the company's performance in terms of new customer starts and market trends. They mention a sequential increase in new customer starts and a decrease in competitive switching. They attribute this to their growth in the installed base and their focus on MDI. They also mention their success in winning customers from competitors.

The company is experiencing overall growth in the market due to the success of their product, Omnipod 5. They are focused on bringing in more patients and have a strong strategy in place. Ana addresses a question about margins and explains that they do not adjust for operational items. Jim clarifies that new starts were up in both the US and internationally. In regards to fourth quarter guidance, the company is seeing growth in the US Omnipod market.

The speaker is responding to a question about Omnipod growth and clarifying that there are many factors that can affect it, such as the pull forward from the previous year. They mention that their overall guidance for the year is strong and that they will not be providing guidance for 2025 during this call. They also mention upcoming events and developments that could impact growth. The next question is about new starts in the US.

Jim Hollingshead, from the company, clarifies that there will be sequential growth in new customer starts in the U.S. in Q3 and Q4, consistent with what they have previously stated. The main driver for this growth is G7, with other tailwinds also contributing. However, there are two changes that have affected their outlook for the second half of the year: a smaller portion of the market is switching to competitors and they have decided to let inventory flow naturally into the specialty pharmacy channel for G7. As a result, the steepness of the ramp in the second half may be slightly less than expected, but the overall impact on total new customer starts for the year is difficult to quantify.

The company expects a good ramp in new customer starts in the U.S. in the second half, with a 70 basis point pressure on gross margin due to a one-time charge. The gross margin in the first half was 70%, but in the second half it is expected to be higher. The impact of Malaysia on gross margin is limited, but is expected to increase in 2025. The company is seeing a lot of traction internationally and the beaten guidance range this quarter is partially due to new patient adds in the two new countries they are in.

The speaker discusses the success of Omnipod 5 internationally and the strong performance in the UK and Germany. They also mention the recent launch in France and the Netherlands, where they are seeing growth driven by MDI new-to-market customers. The speaker notes that most international customers are locked into contracts, making it a challenge to switch to new technology.

The company is pleased with the performance of their CGM and pump products and is optimistic about the launch of Omnipod 5 internationally. They are also seeing a trend of smaller competitive switching in the market and are focused on market growth rather than competitive switching. In terms of new starts and demand, the company is not looking to disrupt the customer experience and is instead focusing on natural inventory growth.

The company is launching a new specialty pharmacy approach for their G7 product, which allows them to focus on growing their new customer base. This approach has been successful so far, with strong demand and a good customer experience. The company has decided not to force inventory into the retail channel and will let it transition naturally.

The speaker discusses the company's focus on delivering a strong customer experience and their satisfaction with the specialty pharmacy sector. They also mention their expectation for year-over-year growth in the second half of the year. The speaker then addresses a question about the prioritization of a new product for Type 2 diabetes and states that they anticipate being able to market to both intensive insulin and basal insulin users. They also mention the potential for patient-agnostic pricing and investments in the back half of the year to prepare for the product launch.

The company's initial plan was to start people on Omnipod GO and then transition them to Omnipod 5 as their insulin needs change. However, the company has decided to launch Omnipod 5 directly, contingent on FDA labeling. This decision will have a long-term impact on the company, including operational benefits. The pricing and sales force strategy for Omnipod 5 will remain unchanged.

The speaker, Ana Maria Chadwick, answers a question from Matt Taylor about channel mix benefits in the US and the company's outlook for shipping sand in different channels. She explains that the company is heavily penetrated in the pharmacy channel and that they will continue to refine their models to improve pricing. The next question comes from Chris Pasquale about the company's international market share and how much of the overall international market they are able to compete for. Jim Hollingshead responds that they are currently only in 24 markets internationally.

The company plans to launch Omnipod 5 in larger markets such as the UK, Germany, France, and Nordics. They have already launched in the US and Germany and have seen good growth. France is a new launch and Nordics will follow. The company expects similar opportunities in all medtech markets. They are confident in the success of Omnipod 5 and have increased their guidance by 600 basis points. In regards to the type 2 launch, they will have a full commercial launch once they receive FDA approval. They have also seen demand for pumps in the basal-only population and this does not change their outlook for Omnipod 5.

The speaker discusses their plans to enter new markets and promote their products. They also mention their confidence in their ability to address the needs of type 2 diabetes patients with their Omnipod 5 product, and their belief that reimbursement will not be an issue for adoption.

The company is seeing an increase in MDI starts for type 2 diabetes, but they are not promoting Omnipod 5 for this use due to lack of indication for use expansion. They expect coverage for Omnipod 5 in type 2 to be finalized soon. The company is also expecting an inventory tailwind in the second half of the year due to the G6, G7 transition. The company's competitors are also seeing an acceleration in MDI penetration rates, potentially driven by new technologies. The company sees MDI as an important part of their business and its durability between type 1 and type 2 diabetes is uncertain.

The speaker discusses the potential for growth in the MDI market, particularly in type 1 and type 2 diabetes. They believe that Omnipod 5 is highly preferred by MDI patients and that the burden of living with diabetes remains high, making the market ripe for growth. They also mention the role of their CGM partners in paving the way for adoption of Omnipod 5 in both type 1 and type 2 diabetes. In response to a question about international strength, the speaker notes that they have worked to ensure reimbursement for Omnipod 5 is reflective of its value to the healthcare system and patients. They also mention the potential for G7 connectivity internationally.

The company has successfully negotiated a premium for their Omnipod 5 product and has seen strong demand and sales. They have not announced timing for the G7 integration, but are working on it. The recent partnership between Medtronic and Abbott does not change their confidence in their competitive position and they have a clear roadmap for expanding their Omnipod 5 platform. They remain optimistic about their partnerships with both Abbott and Dexcom.

The speaker discusses the expected benefits of shifting to Malaysia, including an increase in gross margin and a reduction in manufacturing time. They clarify that there will be sequential and year-over-year growth in new customer starts globally, with a focus on international growth. They also mention that they will provide more information on long-term guidance in the future. The speaker then hands the conference back to Mr. Jim Hollingshead for closing remarks.

Insulet CEO Jim Hollingshead expresses his satisfaction with the company's Q2 results and excitement for the second half of the year. He highlights the company's continued innovation with the release of G7, iOS, and Libre 2 in the US, as well as the anticipated FDA clearance for Omnipod 5 for type 2 diabetes. The international business is also performing well thanks to Omnipod 5. Hollingshead credits the success to the hard work of the global Insulet team and thanks them for their dedication to improving the lives of people with diabetes. He concludes the conference call and looks forward to updating investors next quarter.

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