INSULET CORP Q3 FY2024 earnings call

Type 2 Label Expansion

• Received FDA clearance for type 2 label expansion of Omnipod 5 in late August. Type 2 users represented over 25% of U.S. new customer starts in Q3. Plan to expand sales force and commercial relationships to target type 2 patients, aiming to reach over 40% of the 2.5 million type 2 insulin-intensive population by 2025.

Cascade of Innovation

• In the U.S., Omnipod 5 integrated with Dexcom G7 is fully available in retail pharmacies; on track to launch with Abbott's FreeStyle Libre 2 Plus by end of 2024. Launched Omnipod 5 iOS app in U.S., which became top downloaded medical app. Internationally, launched in France and Netherlands, with plans to expand to additional countries in 2025, including Sensor of Choice integrations.

Customer Base and Market Leadership

• Omnipod 5 is #1 insulin pump for new pump users in Europe. Approximately 90% of U.S. customers and 25% of international customers use Omnipod 5. Growing new customer starts from MDI users. State-of-the-art Malaysian manufacturing facility opened, enhancing capabilities. Nearly 100% of pods sold through pharmacy channel, with over 22,000 HCPs prescribing Omnipod 5.

In Q3, total Omnipod revenue grew 26%. U.S. Omnipod growth was 23%, and International Omnipod revenue grew 35%. Drug Delivery revenue was $10 million, above guidance. Omnipod is the main revenue driver, with Drug Delivery being a smaller segment. U.S. Omnipod growth contributed significantly, and International saw strong growth due to continued demand for Omnipod 5.

Fourth Quarter

• Expect total Omnipod revenue growth 13%-16%, total company growth 12%-15%. U.S. Omnipod growth 9%-12%, International Omnipod growth 30%-33%. Drug Delivery revenue ~$7M-$8M.

Full Year 2024

• Raised total Omnipod revenue growth to 21%-22%, total company revenue growth to 20%-21% (over $2B). U.S. Omnipod growth 19%-21%, International Omnipod growth 25%-27%. Drug Delivery decline 5%-10%. Gross margin expected ~69%, operating margin ~14.5%.

Q: Europe stood out, #1 in markets sold, magnitude of new patient growth, pricing sustainability, Europe potential A: #1 in markets served in Europe. Strong new patient growth in Europe, with U.K., Germany, Netherlands, France ramping. Pricing in International markets expected to accrete as new markets launch.

Q: 2025 guidance, competitive landscape A: Will provide detailed guidance in February. Competitor conversions to Omnipod 5, industry-leading retention, and focus on bringing MDI users to Omnipod 5.

Q: Type 2 commercial preparation, HCPs prescribing Omnipod 5 A: Extending commercial model to high-writing PCP practices. Over 22,000 HCPs prescribe Omnipod 5, focusing on expanding to type 2 patients.

Q: Type 2 patient feedback, ramp of curve A: Positive feedback from type 2 patients, high demand for AID therapy among type 2 patients on insulin.

Q: Operating margins, leverage, sustainability A: Strong margin performance from gross margin expansion and scale leverage. Anticipate 100 basis points annual margin expansion, with benefits from gross margin and operating expense leverage.

Q: CGM integrations impact A: Sensor integrations (G7, Libre) have been material for new customer starts, providing choice to patients and driving growth.

Q: Basal side strategy, patient intensification A: Omnipod 5 suitable for basal-only patients. Type 2 patient retention expected to grow as customized offerings develop.

Q: Pharmacy channel defense, pricing A: Strong position in pharmacy channel due to product fit, Part D reimbursement, and stakeholder benefits. Negotiate PBM contracts with win-win volume-rebate dynamics.

Q: Fully closed-loop algorithms A: Working on two algorithm programs, accelerated by real-world data, aiming for improved glycemic control.

Q: Retention measurement, trend A: Retention runs in low 90s, very stable, driven by high-quality customer experience.

Q: Impact on patient service with scaling A: Focus on end-to-end customer experience, scaled commercial, care, and support capabilities to handle growth.