INSULET CORP Q4 FY2024 earnings call

• Achieved over $2 billion in revenue for the first time, marking the ninth consecutive year of 20% or more constant currency revenue growth. - Have an estimated 500,000 global customers with 365,000 active Omnipod 5 users. - Initiatives include advancing the Omnipod 5 platform with innovations like iOS app integration, sensor integrations (e.g., with G6, Libre 2 Plus, Dexcom G7), and the launch of Omnipod Discover. - In the U.S., focused on growing type 1 and type 2 new customer starts, with type 2 new customer starts representing over 30% of Q4 U.S. new customer starts post-FDA clearance for type 2 label expansion. - International expansion with strong progress in markets like the U.K., Germany, France, Netherlands, and plans to launch in additional European countries, with sensor integration rollouts planned. - Expanded U.S. sales force to engage more patients and prescribers for type 2 diabetes.

For the full year 2024, Insulet delivered revenue of $2.1 billion, representing 22% growth over the prior year. U.S. Omnipod revenue grew 21%, while International Omnipod had constant currency growth of 27%. Drug Delivery revenue grew 34.1%. Fourth quarter gross margin was 72.1%, up 120 basis points year-over-year, driven by U.S. volume through the pharmacy channel, Omnipod 5 pricing in international markets, and improved manufacturing efficiencies. Full year gross margin was 69.8% and operating margin was 14.9%.

• Full year 2025 total Omnipod revenue growth expected to be 17%-21%, total company revenue 16%-20% (constant currency). - U.S. Omnipod revenue growth expected 16%-20%, driven by Omnipod 5 adoption, type 1 and type 2 growth, and benefits from G7, Libre 2 Plus, and iOS. - International Omnipod revenue growth expected 22%-26%, with growth in markets like the U.K., Germany, France, Netherlands, and recent country launches. - Drug Delivery expected to decline 45%-55% in 2025. - Full year 2025 gross margin expected ~70.5%, operating margin ~16.5%, effective tax rate 20%-25%. - First quarter 2025 total company revenue growth expected 22%-25%, U.S. Omnipod 21%-24%, International Omnipod 28%-31%, Drug Delivery -5% to -10%.

Q: Robbie Marcus at JPMorgan asked about type 2 growth, specifically ballparking growth rates and trajectory in 2025.

A: Jim Hollingshead responded that they're not breaking out specific NCS growth rates by category but noted strong response since type 2 label clearance in August, with growth in prescribers and sales force expansion driving growth in 2025.

Q: Jeff Johnson at Baird asked about excitement for Omnipod 5 in type 2 among different prescriber layers (endos, PCPs).

A: Jim Hollingshead said patients love Omnipod 5, with strong reception across endocrinology practices (including those waiting for the label) and PCPs writing rapid-acting insulin, and the ADA updating guidelines to suggest AID therapy for type 2 on intensive insulin therapy supports growth.

Q: Travis Steed at Bank of America asked about Q1 U.S. guidance excluding stocking dynamics.

A: Ana Chadwick explained the normalized guidance for the destocking event in 1Q 2024 brings it to mid- to high teens, aligning with full year 16%-20% guidance.

Q: Michael Polark at Wolfe Research asked about the impact of sales force expansion on guidance.

A: Jim Hollingshead said the guide includes the planned rollout, with 75% of sales force expansion roles filled and training ongoing, assuming reps are in place timely.

Q: Issie Kirby at Redburn Atlantic asked about early adopters in type 2 and DTC leads.

A: Jim Hollingshead said strong reception across type 2 patients, with clear adoption in endocrinology practices and PCPs writing rapid-acting insulin, and DTC leads are powerful due to Omnipod 5's ease of use, improving yield as they can now route type 2 patients to Omnipod 5.

Q: Patrick Wood at Morgan Stanley asked about midterm sustainability of international growth.

A: Jim Hollingshead said Omnipod 5 wins everywhere it's launched, with benefits like discrete design, sensor compatibility, and appeal to MDI patients not previously using pumps, and growth in U.K., Germany, France, Netherlands is sustainable.

Q: Macauley Kilbane on behalf of Margaret asked about Omnipod Discover feedback and rollout.

A: Jim Hollingshead said Omnipod Discover has strong feedback, allowing patients to see usage data, tips, and physicians to view patient data, streamlining workflows and improving patient experience and care.

Q: Larry Biegelsen at Wells Fargo asked about type 2 percent of new starts and focus on type 1.

A: Jim Hollingshead said focus is on growing both type 1 and type 2, with type 2 having a large addressable market, and no risk of taking eye off type 1 as it's a strategic imperative.

Q: Marie Thibault at BTIG asked about margin guidance and R&D investment.

A: Ana Chadwick said margin expansion includes gross margin and operating margin, with investment in R&D, sales/marketing, and general administrative expenses, leading to 160 basis points expansion in 2025.

Q: Mike Kratky at Leerink Partners asked about competitive landscape in type 2.

A: Jim Hollingshead said Omnipod 5 is first to market, with inherent advantages like simplicity and glycemic control, and confident in position even with competitors following, as Omnipod 5 has overtaken competitors in type 1.

Q: Jayson Bedford at Raymond James asked about new customer starts growth in U.S. and type 1 contribution.

A: Jim Hollingshead said it's a strategic imperative to grow both type 1 and type 2, though guidance doesn't break out splits, focused on growing both markets.

Q: Matt Taylor at Jefferies asked about competition in pharmacy channel and pricing.

A: Jim Hollingshead said advantages include experience in pharmacy channel, Part D reimbursement, pay-as-you-go economics, and relationships with PBMs, giving a clear moat against competitors.

Q: Phil Dantoin on behalf of Matt asked about U.S. guidance and type 2 opportunity.

A: Ana Chadwick said growth is expected to accelerate, with volume being a driver and team aiming for high end of guidance, and Jim Hollingshead noted strong track record of achieving growth goals.

Q: Chris Pasquale with Nephron Research asked about margin guidance offsets and long-term gross margin potential.

A: Ana Chadwick said gross margin guidance considers international lower pricing and Malaysia facility impact, but team is positioned to drive margin expansion, aiming for 70.5% gross margin in 2025 and moderate long-term growth.

Q: Joanne Wuensch at Citi asked about priority between type 2 and international growth.

A: Jim Hollingshead said both type 2 and international are strategic imperatives with significant growth opportunities, and more details will be shared at Investor Day in June.