The paragraph is an introduction to Insulet Corporation's Third Quarter 2024 Earnings Call. The operator welcomes participants and explains that the call will include a listen-only mode followed by a Q&A session. Deborah Gordon, Vice President of Investor Relations, then takes over, introducing the company's President and CEO, Jim Hollingshead, and CFO, Ana Maria Chadwick. She mentions that the call's replay, press release, and supplemental earnings presentation will be available on their website. Additionally, Gordon highlights that the call may include forward-looking statements and non-GAAP financial measures, advising listeners to refer to their SEC filings for more context.

The paragraph discusses Insulet's strong financial performance and milestones achieved in managing diabetes, highlighting a trajectory to surpass $2 billion in annual revenue. The company received FDA clearance for expanding the use of Omnipod 5 to type 2 diabetes, showcasing its strong market potential. In the third quarter, Insulet saw global growth in new customer starts, with both type 1 and type 2 diabetes users increasing in the U.S. and stable demand internationally, despite typically slower summer months. Omnipod 5 leads in the global market, becoming the top insulin pump for new users in Europe, and the company anticipates continued growth in new customer starts for the fourth quarter.

The paragraph outlines the company's strategic focus on expanding its Omnipod 5 platform, aiming to drive growth in the U.S. and internationally for both type 1 and type 2 diabetes. The company reports strong financial results, with the third quarter showing significant revenue growth driven by the Omnipod, including a notable 35% growth internationally. The CEO highlights the recent type 2 label expansion, making Omnipod 5 the only AID system for both diabetes types, and emphasizes its benefits such as ease of use, affordability, and compatibility with smartphones. This expansion has contributed significantly to new customer starts, with type 2 users making up over 25% in the U.S.

The paragraph discusses Insulet's expansion strategy for the Omnipod 5 in the U.S. type 2 diabetes market. By making the product available to approximately 6 million insulin-requiring type 2 diabetes patients, the company significantly expands its market. This includes 2.5 million insulin-intensive patients and over 3 million using basal-only insulin therapy. With the market currently less than 5% penetrated, Insulet is actively growing its sales force and strengthening commercial relationships, targeting both endocrinology and high-prescribing PCP practices. They anticipate reaching 40% of the insulin-intensive segment by 2025 and will continue their direct-to-consumer (DTC) efforts, noting that over 50% of DTC leads are from type 2 diabetes patients. Overall, Insulet is focused on strategic investments to drive margin expansion and strengthen its position.

Last quarter, the full market release of the Omnipod 5 with Dexcom's G7 in the U.S. began, starting with specialty pharmacies and expanding to retail pharmacies, achieving consistent customer targets. G7 pods are now widely available, making it easier for users to start with Omnipod 5. Additionally, there are plans to launch Omnipod 5 integrated with Abbott's FreeStyle Libre 2 Plus sensor by the end of the year. The company has also launched the Omnipod 5 iOS app, quickly becoming the top downloaded medical app in the iOS App Store. Featuring enhanced capabilities, the app allows users to manage their needs with just their smartphones, receiving extremely positive feedback. The app will be integrated with G7 in the U.S. as planned.

The paragraph highlights the company's progress and future plans for the Omnipod 5 insulin delivery system. They aim to launch additional integrations and expand internationally in 2025, including introducing Omnipod 5 with FreeStyle Libre 2 Plus and the G7 sensor. By the third quarter, Omnipod 5 usage had reached 90% among U.S. customers and 25% internationally, showcasing strong adoption. The company targets users of multiple daily injections (MDI) to expand its customer base, with over 85% of new U.S. users previously using MDI. Omnipod maintains market leadership through its unique offerings, manufacturing capabilities, and increased production facilitated by a new facility in Malaysia.

The paragraph discusses the success and growth of the Omnipod product line, particularly through the U.S. pharmacy channel, which now accounts for nearly all sales. Investments have facilitated expertise and infrastructure development, leading to increased prescriptions for Omnipod 5 from over 22,000 healthcare providers. The company's third-quarter results exceeded expectations, with a 25% revenue growth, driven by a 26% growth in Omnipod sales. U.S. Omnipod growth reached 23%, bolstered by strong demand and the integration with G7. The recent FDA clearance for a type 2 label expansion is expected to drive further growth and contribute significantly to revenue by 2025. Overall utilization trends remain stable compared to the prior year.

In the third quarter, the international segment significantly outperformed expectations, achieving 35% revenue growth driven by strong demand for the Omnipod 5, especially following launches in the U.K. and Germany. Growing adoption in France and the Netherlands and integration with Libre 2 Plus also contributed. While volume was the main growth factor, pricing increases enhanced international revenue. Utilization trends were elevated due to higher initial orders similar to the U.S. launch. Favorable foreign currency conditions and increased demand in drug delivery also boosted results, with drug delivery revenue hitting $10 million. The company improved its gross margin to 69.3% through better pricing and manufacturing efficiencies. Both operating and adjusted EBITDA margins exceeded expectations. The company is well positioned for continued growth with more Omnipod 5 launches planned for early 2025 and noted a release of a valuation allowance in tax considerations.

In the third quarter, the company released a $12 million noncash tax benefit and plans to release an additional $15 million in the fourth quarter. The anticipated non-GAAP effective tax rate for 2024 and 2025 is 20%-25%. The quarter concluded with $900 million in cash and a $300 million credit facility. The company focuses on margin expansion, profitable growth, and positive cash flow to invest and strengthen finances. For the fourth quarter, Omnipod revenue is expected to grow by 13%-16%, or 12%-15% for the total company, with U.S. Omnipod growth at 9%-12% and international growth at 30%-33%. There is a favorable currency impact of 100 basis points. Drug Delivery revenue is projected at $7 million-$8 million for the fourth quarter. For the year, the company raised revenue growth expectations to 21%-22% for Omnipod and 20%-21% for the total company, surpassing $2 billion in total revenue, with U.S. Omnipod growth adjusted to 19%-21%.

The paragraph discusses International Omnipod's increased revenue growth expectations, now in the range of 25% to 27%, with a positive impact from foreign currency. The success of Omnipod 5 has led to raising the international full-year outlook by 1,700 basis points since early 2024. The Drug Delivery outlook has improved, with a smaller expected decline of 5% to 10%. Given strong performance, Insulet anticipates a gross margin of about 69% and increased operating margin guidance to approximately 14.5%. Insulet is committed to expanding profitability and market leadership, investing in long-term growth and innovation. In the closing, the operator opens the line for questions, with a note that Europe showed strong performance in the third quarter.

The paragraph addresses a few key points about the performance and market presence of Omnipod 5 in Europe. Jim Hollingshead confirms that Omnipod 5 is the top pump in the European markets they serve, despite not being available in all markets yet, highlighting strong growth in the U.K., Germany, Netherlands, and France. Ana Maria Chadwick adds that pricing strategies in international markets are aligned with the perceived value of Omnipod 5, leading to premiums from health ministries, especially in established markets like the U.K. and Germany. As they expand into new markets, they expect continued growth, with new markets potentially seeing pricing adjustments similar to those in mature markets.

In the article, Jim Hollingshead discusses stable new patient growth in Europe, particularly in France, despite expected seasonality. In the U.S., they experienced strong sequential growth in new customer starts for both type 1 and type 2 diabetes, with MDI leading. Jeffrey Johnson asks if the industry can sustain or increase penetration rates for type 1 and type 2 diabetes, considering potential challenges such as prior authorization, manufacturing capacity, and limited healthcare provider availability.

The paragraph discusses the company's strategic focus on maintaining and extending its leadership in the type 1 diabetes market while viewing the type 2 market as an additional opportunity. They plan to continue driving growth in Multiple Daily Injections (MDI) for type 1, where they are clear leaders, and aim to develop the Automated Insulin Delivery (AID) market for type 2, where penetration is currently low. The company expresses optimism about its position as the first player with an indication for AID use in type 2, expecting significant growth in penetration over the next few years. Travis Steed from Bank of America asks for insights into new patient opportunities in 2025 for type 2 and competitive dynamics, to which Ana Maria Chadwick responds by initiating a discussion on guidance and competition.

The company is optimistic about its growth prospects and plans to provide detailed guidance by February as part of its annual cycle. Revenue growth is driven by new customer starts, particularly in the U.S., and will become more evident by 2025 due to their annuity model. International markets will see growth as new ones ramp up and existing ones mature. They anticipate most growth from their expanding customer base. Additionally, they have high industry retention and have experienced an increasing number of conversions from a noisy competitor to their Omnipod 5 product over the past two quarters.

The paragraph discusses the success of the Omnipod 5 platform, emphasizing its ease of use and advantages, which have led to competitive conversions since its August 2022 launch. The company's focus is on stimulating market growth by transitioning patients from multiple daily injections (MDI) to the Omnipod 5 therapy, where they are the market leader. Each quarter, more patients have switched from MDI to Omnipod 5 than to competitors' alternatives. In response to a question from Michael Polark of Wolfe Research regarding commercial preparations for type 2 diabetes, Jim Hollingshead indicates they won't specify exact figures for field force investment but states that the expansion aligns with their financial guidance. The company is enhancing its commercial model to target more accounts and improve focus on opportunities in 2024.

The paragraph discusses the company's efforts to expand its commercial model for reaching more patients using insulin therapy for type 2 diabetes. Historically, their focus has been on endocrinology practices, reaching about 30% of type 2 users on intensive insulin therapy. They are now extending their efforts to high-prescribing primary care practices, aiming to reach over 40% of these users, including more basal-only patients. The company has expanded its sales force and plans further expansion in Q4 and into 2025. Following this update, Danielle Antalffy from UBS asks about the Q4 guidance for the U.S. Omnipod line, noting it comes in below consensus at the midpoint despite a strong recent quarter. Ana Maria Chadwick acknowledges the question and confirms the midpoint guidance.

In the paragraph, the company discusses its guidance for Omnipod, noting a projected growth of 21% on a normalized basis compared to the previous year. They highlight that U.S. Omnipod is expected to grow over 20% in each quarter of the 2024 calendar year and express confidence in reaching the midpoint of their full-year guidance. During a Q&A session, Patrick Wood from Morgan Stanley asks about the feedback and surprises in the type 2 diabetes market following recent label clearance. Jim Hollingshead responds by expressing pride in his team for adapting swiftly to the earlier-than-expected clearance, allowing for a timely launch.

The paragraph discusses the positive impact seen in September from an increase in type 2 diabetes patients using Omnipod GO as part of insulin therapy. Despite some patients struggling with glycemic control while on insulin and GLP-1 therapies, the SECURE-T2D trial demonstrated benefits from using this technology. Practices, especially high-prescribing PCPs that previously did not recommend pumps, are showing interest in Automated Insulin Delivery (AID) technology due to the simplicity of Omnipod, compared to traditional, complex pumps. The Omnipod 5 has exceeded expectations in ease of use, as noted by investigators in the trial. There is a strong market potential due to the unmet clinical needs and increasing doctor interest. The paragraph ends with the operator introducing a question from Lawrence Biegelsen of Wells Fargo.

The paragraph discusses a follow-up question about the 21% underlying growth of the U.S. Omnipod in Q4, noting a deceleration from Q3 after adjustments. The question asks whether the launch for type 2 diabetes will help maintain or accelerate this growth. Ana Maria Chadwick responds by expressing excitement over the growth and highlighting the annuity model's benefit, which will become more apparent as they progress through upcoming quarters into 2025. Jim Hollingshead adds that they're transparent with estimates and confident in their growth guide, citing sequential new customer start growth in the U.S. for both type 1 and type 2 diabetes. He mentions expected year-over-year growth for the second half of the year and the positive impact of type 2 growth on their guidance for Q4. The annuity model will create a ramping effect in revenue into 2025.

In the paragraph, an unidentified analyst, Jimmy, asks about the company's strong operating margin performance and its sustainability into the next year. Ana Maria Chadwick responds by expressing the company's strong confidence in sustaining margin growth, aiming for an annual expansion of at least 100 basis points. She attributes the margin improvements to gross margin expansion and operational scale, which have reduced base operating expenses. While gross margin growth is expected to moderate due to the U.S. price appreciation from shifting to the pharmacy channel, other efficiencies and international market strategies, including price accretion, are anticipated to further benefit margins.

In the paragraph, Jim Hollingshead addresses questions about the use of Omnipod 5 for basal-only patients and type 2 diabetes management. He notes that some physicians have been using Omnipod 5 for basal patients off-label, and now with its official indication for use, it will be promoted to those patients. The SECURE-T2D study demonstrated benefits for basal-only patients comparable to those on multiple daily injections. The target market for Omnipod 5 includes patients on insulin therapy who are not well-controlled, including both intensive and basal insulin users. Hollingshead expresses optimism about the type 2 diabetes market and notes strong retention rates, primarily among type 1 patients, though type 2 patients also face challenges due to their comorbidities.

The paragraph discusses the different subsegments within the type 2 diabetes patient population and the potential variations in usage patterns and retention. Despite these differences, all type 2 patients contribute to business growth. The focus is on creating customized offerings and simplifying the experience with Omnipod 5 for these patients. This aims to achieve high retention rates similar to other patient groups. The conversation then shifts to Jim Hollingshead addressing a question about the commercial impact of continuous glucose monitor (CGM) integrations, noting the success of integrating with the G7 sensor in the U.S., which has significantly contributed to new customer starts, while the G6 also remains widely used.

The article discusses the positive impact of offering a choice of sensors for patients and new customer growth. Initially launched in Europe with the G6 integration, they have now introduced a Sensor of Choice in the U.K. and the Netherlands, allowing customers to choose between the G6 sensor and the Libre 2 Plus Sensor, resulting in strong market growth. The company plans to launch the Libre 2 Plus Sensor integration in the U.S. by the end of the year, providing customers with three sensor options. Ana Maria Chadwick highlights the success and positive response of the recent iOS launch of the G6 in the U.S., indicating confidence in future iOS availability. During a Q&A, Jayson Bedford from Raymond James asks for clarification about international strength and utilization, noting the absence of quantified stocking benefits following the Omnipod 5 launch, and poses a question related to the U.S. user base and pricing.

Ana Maria Chadwick and Jim Hollingshead discuss the adoption and potential growth of the Omnipod 5 in international markets, particularly in Europe. Chadwick notes that the increase in use is not due to stocking but is similar to the U.S. market, where customers order extra supplies for future use. Hollingshead expects Omnipod 5 to become the preferred AID system internationally, just as it has in the U.S., though the transition may be slower in Europe due to four-year contracts. Despite this, Omnipod 5 is already the leading pump in the European markets where it is available, and strong growth in new customer starts is anticipated as it continues to roll out internationally.

In the paragraph, Jim Hollingshead expresses optimism about the potential for growth in the type 2 diabetes market, particularly with their product, Omnipod 5. He highlights that the company is a leader in the type 2 market due to their advanced product features and accessibility through pharmacies. Hollingshead believes they have a strong position to expand market penetration, possibly doubling or tripling it over the next few years. He underscores the company's current leadership in the market and their expectation of significant growth. The paragraph concludes with a segue to Matthew O'Brien from Piper Sandler, who is interested in discussing the pharmacy channel.

Jim Hollingshead discusses the strong position of Omnipod in the pharmacy channel amidst competitive challenges. He highlights that Omnipod's convenience for patients and physicians, due to its Part D pharmacy benefit reimbursement, makes it appealing. The product is easy to prescribe and fulfills the needs of various stakeholders, including payers and pharmacy benefit managers (PBMs), who benefit from high member satisfaction and revenue from rebate money due to the high volume of sales. Hollingshead emphasizes that the company is adept at negotiating PBM contracts annually, ensuring a beneficial arrangement through favorable relationships, volume, and rebates.

The company has extensive experience with PBM contracts, having signed its first in 2017. Chris Pasquale from Nephron Research inquires about the development of fully closed-loop algorithms aimed at assisting patients less engaged in managing their disease. Jim Hollingshead responds, highlighting the effectiveness of their current Omnipod 5 algorithm in maintaining industry-leading time in range and managing missed boluses. He mentions the company's two parallel algorithm development programs, suggesting ongoing efforts to enhance their technology for broader applicability and potential commercial use.

The paragraph discusses two algorithm programs being developed, one nearing a closed-loop design. Both have benefited from data from actual patient use, including insights from the Omnipod's first 30,000 users. This data has allowed for in silico simulations to adjust algorithms, leading to early clinical trials for both programs. The speaker expresses optimism about improving algorithms and acknowledges the positive outcomes currently achieved in glycemic control. The discussion then shifts to questions from Joanne Wuensch about the impact of integrating Libre and G7 sensors. Jim Hollingshead responds that these integrations provide growth opportunities, with G7 boosting new customer starts in the U.S. and Libre 2 Plus in the U.K. and Netherlands, and anticipates similar growth when Libre 2 Plus is introduced in the U.S.

The paragraph discusses the growth in new customer starts for both Type 1 and Type 2 diabetes in the U.S., with Medtronic Diabetes (MDI) showing sequential growth each year and expecting year-over-year growth in Q3 and Q4. Jim Hollingshead highlights the high retention rate of Omnipod 5 users in the U.S., which is tracked through cloud data, indicating a stable retention rate in the low 90s. The company is focused on delivering a user-friendly experience to ensure continued customer retention.

In the paragraph, Bill Plovanic from Canaccord asks about the impact of launching the AID system on the company's commercial organization and patient service. Jim Hollingshead responds by emphasizing their focus on delivering a comprehensive, end-to-end customer experience, from diagnosis through ongoing support, leveraging the cloud connectivity of Omnipod 5. He acknowledges past challenges with overwhelming demand at the U.S. launch in August 2022, which affected customer support. However, he assures that the company has now scaled its commercial, customer care, and sales capabilities to meet demand effectively.

The paragraph highlights the company's focus on enhancing customer experience and expanding its product support, particularly for the Omnipod platform. Jim Hollingshead emphasizes the company's strong competitive advantages, market-leading growth, and solid financial foundation. The expansion of their type 2 diabetes label is described as a significant milestone benefiting stakeholders, and the company is committed to disrupting the diabetes market. Strategies include expanding the Omnipod 5 platform and accelerating growth both in the U.S. and internationally. Hollingshead acknowledges the dedication of Insulet employees and concludes by thanking participants, looking forward to the next update.

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