Q1 2022 Insulet Corp Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the Insulet Corporation's first quarter 2022 earnings call. At this time, all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
If anyone should require assistance during the conference. Please press Star then zero on your Touchtone telephone as.
As a reminder, this conference call is being recorded I would now like to turn the conference over to your host Deborah Gordon Vice President Investor Relations.
Thank you Don and good afternoon, and thank you for joining us for Insulet first quarter 2022 earnings call with me today are <unk>.
President and Chief Executive Officer, Wade Mcmillan, Executive Vice President and Chief Financial Officer, and Jim Hollingshead number of Insulet Board of directors and input feature President and CEO , Tracy and right along with Bret Christensen, our executive Vice President and Chief commercial officer will be available for the Q&A.
<unk> of our call both the replay of this call and the press release discussing our 2022 first quarter results and 2020 guidance will be available on the Investor Relations section of our website.
Before we begin I would like to inform you that certain statements made by Insulet. During the course of this call may be forward looking and could materially differ from current expectations. Please refer to the cautionary statements in our SEC filings for a detailed explanation of the inherent limitations of such statements.
We will also discuss non-GAAP financial measures with respect to our performance, namely adjusted EBITDA and constant currency revenue, which is revenue growth. Excluding the effect of foreign exchange. These measures aligned with what management uses as supplemental measures in assessing our operating performance and we believe they are held.
Full to investors analysts and other interested parties as measures of our operating performance from period to period. Additionally.
Additionally, unless otherwise stated all financial commentary regarding dollar and percentage changes will be on a year over year reported basis with the exception of revenue growth rate, which will be on a year over year constant currency basis with that I'll turn the call over to safety. Thanks, Deb and good afternoon, everyone and thank you for joining us.
Before we turn to our first quarter results I'd like to take a moment to talk about this afternoon's announcement that for personal reasons I will be stepping down from my executive positions at Insulet.
After careful consideration over some time I have made the very difficult decision to reduce my professional obligations in light of medical issues and other circumstances that have been impacting my family and those I care deeply about.
That give June 1st Jim Hollingshead, a member of our board of directors since 2019, It will succeed me as president and CEO .
I am extremely proud of what we have accomplished in my time as CEO . We have made significant strides to improve the lives of people with diabetes, while enhancing and flexibility to innovate and operate with excellence Insulet is well positioned for the full U S. Commercial launch of Omnipod, five and poised for <unk>.
<unk> growth and impact for shareholders and the diabetes community.
I remain profoundly committed to inflect and the company's long term success and I look forward to continuing to serve as a director on <unk> Board and as an advisor to Jim and the team I will be working hand in hand, with Jim to ensure a seamless transition of leadership responsibilities.
In recent years, we have made great progress improving the lives of people with diabetes by delivering consumer focused innovation growing the companys global addressable market and driving operational excellence.
Hundreds of thousands of powders around the world are leading happier and healthier lives because of our work and dedication and with Omnipod five we will offer significantly improved outcomes and incredibly simplify diabetes management to millions of people across the globe.
I have never been more excited or confident about <unk> future and so that has a deep talented team and is firing on all cylinders and poised for incredible growth.
I know, Jim well from our service on the Insulet Board together and I'm delighted that he is the one to step into the role of CEO at this important time.
The company will be in great hands under his leadership he knows our company, our culture and our team and our strong relationships. He has fostered with our management team will immediately served the company well and ensure a smooth transition.
His significant experience at the rapidly evolving crossroads of medical technology and digital solutions will also be incredibly valuable to the company.
Jim has joined US today, and I'd like to turn the call over to him for a few remarks.
Thank you Tracy.
<unk> has built a terrific working relationship and I am very pleased that she will continue to serve on <unk> Board and in addition serve in an advisory role with the company Chase's continued active involvement and oversight will be incredibly valuable. This gives me great confidence that we won't Miss a beat.
<unk> remarkable leadership.
It has delivered tremendous growth the company has pioneered innovations that deliver on our mission to simplify and improve the lives of people with diabetes and I will work hard to build on that legacy.
On a personal note I am excited to spend a lot more time in our company's headquarters I plan to get a place here and also maintain my residence in Southern California near Insulates operations in San Diego in Tijuana.
Im also looking forward to getting out on the road over the next several months to meet with Insulet is amazing employees as well as the Companys business partners analysts investors and other stakeholders.
In closing I'm honored to assume the role of President and CEO of Insulet at this important time and I'm energized about working alongside our excellent leadership team and talented employees to continue advancing our mission and strategic imperatives.
We are well positioned to build on <unk> momentum to drive significant value for shareholders and to continue to execute our mission.
With that I'll turn the call back over to Stacy for commentary on the quarter.
Thanks, Jim we are off to a great start in 2022 with financial results that finished ahead of expectations as our team continues to execute and build on the momentum in our business.
We once again had record Q1 U S and global new customer starts in the first quarter building on our success throughout 2021.
We have meaningfully advanced our strategic imperatives and are on track for another successful year.
Our position in the underserved global diabetes market has never been stronger.
We are especially excited about the overwhelmingly positive feedback we have received during our limited market release from users of Omnipod five the first two bliss automated insulin delivery system with full compatible smartphone control the.
The feedback has been nothing short of spectacular users love the system and have shared how it greatly simplifies their diabetes management and is truly changing their lives HCP feedback has been equally strong.
Our efforts to bring Omnipod five to our international markets are well underway, including our CE Mark submission under active review and we continue to expand our global presence. We also recently shared compelling data from our type two feasibility study at the H T D diabetes conference, which demonstrates the value of Omnipod.
<unk> can bring to the type two community.
Ami pod offers an unmatched option for people living with type two diabetes, given our pay as you go model pharmacy access attractive form factor growing clinical evidence and unparalleled simplicity.
In the first quarter type two users represented approximately 35% of our U S new customer starts.
Our competitive advantages and exciting innovation pipelines and both the type one and type two market segments position us to drive long term revenue growth increase our market share and total addressable market and expand our margins.
Also last week, we published our 2021 sustainability report to provide all of our stakeholders a view into influx approach to environmental social and governance programs and the exciting progress we've made across a number of fronts. Just a few examples in 2021, we reached 60% gender.
Diversity on <unk> Board.
Millions of used pods were diverted from landfills globally through product take back programs and solar panels at our Massachusetts headquarters generated almost 800000 kilowatt hours of renewable energy.
Insulet is committed to the three pillars of our sustainability strategy resilient operations sustainable product innovation and people and communities and it is encouraging to see us continue to mature across each of these areas.
Now turning to an update on our strategic imperatives, which include expanding access and awareness delivering consumer focused innovation.
Growing our global addressable market and driving operational excellence.
Today, we are working to expand access to and awareness of Omnipod given the global diabetes market is underpenetrated and growing.
We continue to drive increased adoption through the U S pharmacy channel, which makes access to omnipod easier and more affordable by eliminating lengthy lock in periods and heavy upfront costs are.
Our pay as you go model removes risks for payers, while also providing a superior and affordable experience for our customers.
The cost of Omnipod is consistent with multiple daily injections, Despite omnipod form factor ease of use and improved outcomes.
As a result, we continued to capture over 80% of our new customers from multiple daily injections.
Nearly all of our global new customers start on Omnipod dash and in the U S. Do so primarily through the pharmacy channel.
Once we move into full market release this year, we can't wait to offer omnipod five solely through the pharmacy.
We also continued to drive increased awareness of Omnipod through our direct to consumer advertising campaign as well as our 30 day free trial, our DTC investment in the U S is ramping in support of Omnipod five.
In addition, we continue to invest in DTC in select international markets, which is helping to drive new customer starts and increase awareness of omnipod.
Brand recognition is strong internationally and these efforts will further raise awareness for omnipod dash in advance of our international launch of Omnipod five.
Our Omnipod five U S limited market release continues to progress as planned in March we made the smartphone app available and we continue to rollout availability on a growing list of Android phone models, including those most widely used in the U S.
The feedback on full smartphone control has been remarkable and highlights how differentiated inexperienced omnipod five offers.
System with what we've heard to date I will share feedback from one user who has tried multiple forms of insulin delivery for 35 years, including tube pumps.
He said he has never been in better control. His fears of Lowe's are almost gone having diabetes is no longer at the forefront of his thinking and he has confidence in the algorithm to quickly get him to his customized target.
He said he knew Omnipod five was going to be good but he didn't anticipate just how good.
All of this feedback validates the years of hard work our teams have put into the development of Omnipod five to deliver the best customer experience.
With this launch we have also created a customer service platform centered on simplifying the omnipod five onboarding process and scaling our ability to train users.
As an example today if you are a current omnipod and decks com user you have the ability to adopt omnipod five through a 100% digital pathway without having to meet with a clinician or be trained by a field rep. This makes omnipod easier to access for our customers.
While we continue to test the Omnipod five customer journeys our market access team is successfully securing expanded coverage, we are well on our way to achieving our internal target by full market release.
After successful completion of the first phase of our limited market release, we recently expanded the availability of Omnipod five through a limited distribution network as planned.
Now any doctor can write a prescription for omnipod five and a growing number of people will have access to it. We know omnipod five is going to be a game changer for people with diabetes, and we can't wait to bring it to the broader community.
Our omnipod five submission for an expanded indication down to age two is under active review with the FDA and progressing well and we continue to plan for updated labeling this year.
We also recently shared compelling data from the initial eight week phase of our type two feasibility study. This was the first prospective AIG study of people with type two diabetes conducted in the U S. And included participants with an average age of 61 years, who used omnipod five at home.
Only one individual had experienced with an insulin pump and approximately half had never used a CGM. The study results were impressive the data demonstrated an overall <unk> reduction of one 3% along with an additional four six hours a day.
In normal Glycemia range.
Participants who were previously on MDI experienced reduced time in hypoglycemia, and a 32% reduction in total daily dose of insulin.
We believe the benefits that users experience during our study are indicative of how powerful omnipod five can be for people with type two diabetes and we remain committed to continuing to innovate to meet the needs of this important group.
We also continued to advance our robust product pipeline, including next generations of our Omnipod five platform. This includes our iOS development, which is progressing very well as is our integration work with <unk> <unk>, seven and Abbott freestyle Libre.
Well I mean pod five as a priority today, we know competing and winning in the underserved global diabetes market requires a firm commitment to innovation, we have a compelling pipeline that includes next generation AI technology robust data driven and digital innovations.
And additional technological advancements designed to expand our total addressable markets.
Lastly, we continue to build on our strong patent portfolio, we had a record setting number of patent filings in 2021 and expect to set another record this year.
Our current technology as well as our exciting innovation pipeline are well protected and should further strengthen our global leadership in diabetes technology.
Diabetes is a growing epidemic with millions of people diagnosed each year and Omnipod is already making a difference in 23 countries. We are focused on further penetrating our existing markets.
Spending our total addressable market by growing our presence in new regions and launching Omnipod five internationally.
Our CE Mark submission is progressing well and we are making terrific progress preparing for an omnipod five international launch we are further building our teams and advancing our regulatory reimbursement and market development efforts.
AIG and CGM awareness and adoption are increasing globally, helping to unlock reimbursement and access pathways.
As a result, we will be well positioned to leapfrog the competition and have omnipod five become the preferred AIG system in our global markets.
In terms of market expansion last month, we launched Omnipod dash in Saudi Arabia, and expect to enter the United Arab Emirates shortly.
Together these countries increase our total addressable market by approximately 1 million people in.
And the overall international opportunity represents a significant long term growth driver.
Our global manufacturing capabilities offer another competitive advantage and we are taking steps to further strengthen our operations.
In addition to focusing on supply chain resiliency and ensuring critical component supply. We're also optimizing our international manufacturing footprint.
The current macro inflationary and supply chain environment is challenging however, our team has been successful in partially offsetting the inflation impact and is also mitigate supply chain risks to ensure uninterrupted supply to our customers.
All of their accomplishments should help ensure we have ample components supply and available capacity to meet the demands of our customers, including our full launch of Omnipod five.
Wade will discuss our manufacturing operations in more detail.
In closing our first quarter results finished ahead of our expectations and we are off to a great start in 2022, we're making terrific progress in the limited market release of Omnipod five.
And looking ahead the balance of the year will include a number of important milestones, including the full commercial release of Omnipod five.
An expanded indication down to age two and advancement of our innovation pipeline 2022 is going to be another exciting year for us as well as our customers across the globe.
I'll now turn the call over to Wade.
Thanks, Tracy before I get into our first quarter performance I'd like to take a moment to express my own gratitude towards JC and also do so on behalf of all of our employees.
Her outstanding leadership and invaluable contributions to both the company and people living with diabetes and setup and fluid for a bright future.
She embodies our mission.
It's been an honor to learn from her and work alongside the group of leaders she has assembled here.
We look forward to working with <unk> and her continued role as a board member and as a company adviser and continuing to benefit from our insights and guidance.
At the same time I'm excited to welcome Jim into his new position. It has been great working with Jim on the board of directors to date, and I Echo Chase's confidence and his deep understanding of our business our culture and our team.
And now onto our results we started the year off well with strong first quarter results made notable progress in all of our strategic imperatives and are on a path for another successful year.
In the first quarter, we generated 19% revenue growth, finishing above the high end of our guidance range on a reported basis for total revenue foreign currency was a 220 basis point headwind over Q1 of last year.
We delivered U S omnipod revenue growth of 21% exceeding our guidance range revenue growth was driven by the compounding benefit from strong new customer starts as well as increasing volume growth through the U S pharmacy channel.
Omnipod dash drove approximately 90% of our U S. New customer starts and pharmacy channel volume increased to over 55% of our total U S volume.
International Omnipod revenue grew 12% and was above our guidance range driven by Omnipod dash adoption, partially offset by the impact of the pandemic over the past year and AIB competition headwinds on a reported basis foreign currency was a 640 basis point headwind over prior.
Year.
Our estimated global attrition remained stable.
Despite a shift in U S volume into the pharmacy channel Global pod utilization also remained consistent with historical seasonality as we typically see a sequential decrease in the first quarter of the year driven by the U S.
Drug delivery revenue increased 36% exceeding our guidance range due to production timing.
Gross margin was 71% and above our expectations, representing a 460 basis point increase or 490 basis points on a constant currency basis.
The primary drivers were improved manufacturing operations growing volume through the U S pharmacy channel and the <unk>.
Mix.
These were partially offset by an expected higher mix of costs as we ramp our U S manufacturing operations.
As a reminder, our current inventory balance includes higher component costs as a result of inflationary headwinds in 2021 to continue in 2022. This will pressure gross margin sequentially each quarter. This year as we sell the product out of inventory.
I'll provide more color on our expected 2022 gross margin cadence in a few minutes.
Operating expenses were in line with our expectations and reflect ongoing investments in innovation sales and marketing and international expansion or.
Our focus to further strengthen these critical areas supports our long term growth trajectory and expansion of our global addressable market.
Operating margin was 12, 8% up 630 basis points and adjusted EBITDA margin was 21, 3% up 740 basis points, both were above our expectations due to a higher than anticipated revenue and gross margin improvement and to a lesser extent timing.
Turning to cash and liquidity, we ended the quarter with over $700 million in cash and the full $60 million available under our revolving credit facility.
Our financial position remains strong and provides opportunities to continue to invest across our business.
We've taken steps to further strengthen our global manufacturing scale and flexibility, including consolidating our production in China into our newer lower cost facility.
We also expect to invest in a new manufacturing facility in Malaysia.
These actions are intended to support our international expansion strategy further ensure product supply and drive margin improvement over time.
Now turning to 2022 guidance, we are maintaining our full year revenue range of 12% to 16% and raising the low end for total omnipod by 100 basis points to 16% to 20%.
For U S. Omnipod, we are raising the low end by 100 basis points to 19% to 23% our growth within the type one and type two markets will be driven primarily by Omnipod dash volume growth and our unique pay as you go model and pharmacy channel access.
Omnipod five launch and adoption ramp will take time, given we are in limited market release for part of 2022 and due to our annuity based business model for.
For International Omnipod, we are maintaining our full year revenue guidance of 9% to 14% driven by ongoing Omnipod dash adoption, partially offset by pandemic impacts in AIB competition headwinds.
As a reminder, we expect international revenue growth will be higher in the second half of the year compared to the first half due to a slightly easier comparison as well as an anticipated improvement in COVID-19 conditions.
Lastly, we continue to expect drug delivery revenue to decline, 30% to 35% as 2021 levels were elevated as a result of the pandemic.
Turning to 2022 gross margin, despite increasing inflationary and supply chain pressure, we continue to expect to achieve 67% to 68%. The drivers of the decline from last year remain the same product mix, including ramping omnipod five volume higher costs.
Fated with our U S manufacturing ramp and higher component and manufacturing costs associated with inflation.
All partially offset by the benefits of our strengthened global manufacturing operations and capabilities and increasing volume in the U S pharmacy channel.
We expect gross margin to decline sequentially throughout the year due to the various factors discussed as well as higher component costs included in inventory.
We were happy to exceed 70% gross margin this quarter and after working through inflationary impacts for the next couple of years, we still have plans to achieve 70% on a sustained basis over time.
We continue to expect operating expenses to rise sequentially in 2022, as we increase investments.
Key areas of investments include our expanding innovation pipeline direct to consumer advertising clinical efforts and the launch of Omnipod.
As a result of the higher macro and inflationary supply chain and foreign exchange pressures, we now expect operating margin to be flat year over year.
Despite these headwinds we're still focused on expanding operating margin overtime.
For Q2, given both the expected sequential decline in gross margin and the increasing sequential investment to support the army bought five launch and other initiatives, we expect a sequential decline in operating margin.
Lastly, we continue to expect capital expenditures will grow slightly this year as we continue to invest in key areas of our business.
Turning to our second quarter 2022 revenue guidance, we expect total company growth of 12% to 15%, including total omnipod growth of 17% to 20%.
Based on current foreign exchange rates, we estimate the unfavorable impact will be approximately 400 basis points on a reported basis.
For U S. Omnipod, we expect to continue to build momentum with growth of 21% to 24% driven by the benefits of a recurring revenue model and growing Omnipod dash volume through the U S pharmacy channel.
As a reminder, and as planned Omnipod five is still in limited market release, and we will not contribute materially to revenue growth in Q2.
We expect Q2 international Omnipod growth of 9% to 12% driven by continued Omnipod dash adoption, partially offset by the compounding impact from lower new customer starts in 2021, largely due to the pandemic and competitive headwinds.
We estimate the unfavorable foreign exchange impact will be approximately 1100 basis points on a reported basis.
Finally, we expect Q2 drug delivery revenue to declined 43% to 37% year over year, which is also a significant sequential decline as revenue is normalizing to pre pandemic trends.
There will be choppiness in the remaining quarterly revenue based on our partner's requested order patterns and timing of production.
In conclusion, we have begun 2022 much like we ended 2021 strong execution against our strategic imperatives, the position Insulet well for long term sustainable growth.
While our mission has not changed our ability to deliver on it only gets stronger.
We've never been in a better position to improve the lives of people with diabetes.
With that <unk>. Please open the call for questions.
<unk> <unk> <unk> <unk>, <unk>, <unk> <unk> <unk> <unk> <unk>.
<unk>.
<unk>.
Are we open for questions.
Sure.
Dilemma, we open for questions.
Backing.
Okay.
Okay.
Sure hang up and redial.
I apologize.
Ladies and gentlemen.
I apologize for that.
Thank you for standing by if you have a question at this time. Please press star one on your Touchtone telephone.
Yes. Your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
We ask that you keep your questions to no more than one but please feel free to go back into the queue. If time permits we'll be more than happy to take your follow up questions at that time.
Our first question comes from the line of Larry <unk> from Wells Fargo. Please go ahead.
Good afternoon, Thanks for taking the question and congratulations on a nice quarter and congratulations on all the success you've had at Insulet I know you'll be missed.
I'd love to start with a question for Jim I heard he's on the line is that okay.
Can you hear me okay.
Yeah.
Operator.
Yes, one moment Sir.
Yeah.
Okay.
Yes.
Yes.
One moment please.
<unk> are you on the line.
Yes, I am on the line, Okay. We've dialed back in so you've got the Insulet team back here chassis weighed Brett.
Okay.
Alright. So go ahead, Mr. Big Big Olson could you please repeat.
Your question.
Sure well first.
Congratulations on the nice quarter here.
Congratulations on the success you've had at Insulet I know you'll be missed.
I heard that Jim was on chassis is it okay to ask Jim My question if not.
Alright, sure Jim Azad.
Jim I think maybe this is the first time many of US are hearing from you certainly in this role.
So Jim you've been on the board of insulated since 2019. So you know the company well so I would love to hear what your goals are over the next year and how are you thinking about insulet more broadly.
See opportunities outside of diabetes. Thanks, so much for taking the question and congratulations on your new role.
Thank you Larry.
I really appreciate the question.
I have been on the Insulet Board now for three years and the first thing I want to say, it's such an honor to.
To be entrusted with leadership for our next chapter of growth led by chasing multiple award.
I think chase. These leadership has just been remarkable.
One of the main reasons only drawn to join the board and in which a privilege to join the board and shaky has accomplished so many things in her tenure here seven year 10 year and three years as CEO , we wouldn't have gone to list them, all but I.
I will say one of the main things that <unk> accomplished issues built this incredible executive team here at <unk>.
And so.
When I think about stepping in and I think we're not going to Miss a beat I think the key thing is it.
We continue to grow we continue to succeed with innovation we're driving.
Opportunities to change the lives of people with diabetes, we're in the middle of a fantastic product launch.
The revolutionary product.
And couple that with the fact that <unk> is going to stay on the board which is.
I'm just really excited she is and she is going to continue to advise us in a formal capacity I think the key thing is we're just charging straight ahead, and we're not going to Miss a beat.
Okay.
Thank you Sir our next question comes from the line of Robbie Marcus from Jpmorgan. Please go ahead.
Oh, great. Thanks for taking the question congrats on a nice quarter and al.
I'll also add chassis, we'll miss you hope.
Wish you the best and Jim Welcome looking forward to working with you.
Thanks, I wanted to I wanted to ask.
On new patients here.
Maybe you could walk us through what happened in first quarter in terms of new patient add some of your peers faced some some difficult times in January February maybe if you could.
Comment on U S new patient growth in international new patient growth and what it was for the quarter and how it trended.
We're looking and focus more on the exit rate and I just wanted to clarify the comments you made.
<unk> is a full launch still possible in the second quarter I just wanted to clarify based on the comments you made thanks a lot.
Sure Yeah, Thanks, Ravi and maybe I'll just reiterate it a high level Q1 was a record quarter for us both globally and in the U S.
Our record Q1 so.
Really strong start to the year.
Did you want to add some detail there just ravi itself.
We're selling our strengths Phil the only <unk> form factor in the market. The simplicity of Omnipod and then we do believe again that the message that the fastest pathway to omnipod five is to get dash and that seems to be resonating and we believe there is a little bit of a lift there as well, but all in all this is another record quarter for new starts and we're real happy with the performance in the U.
And around the globe.
And to your second question regarding Omnipod five and the full market release, we were excited to expand our limited market release, I think Brad and the team did a really smart thing, they're expanding through specialty and.
And mail order pharmacies, which is about where 20% of our business goes through today about 80% of it goes through retail and we're not yet in retail, but I would just caution anybody from thinking about it as a flip of the switch. So we're going to continue to ramp here towards full market release and.
And right now, we're going from sort of hundreds of patients to thousands of patients. So.
Of course, I guess June is still possible, but we have to give ourselves the room to take any learnings that might occur from.
This move from hundreds of patients to thousands of patients and make sure that we react to those incorporate those learnings and that we are fully prepared for a full market release and entering into the retail channel when.
When we get there so.
So hopefully that gives you a good guidance.
Okay.
Thank you.
I show. Our next question comes from the line of Travis Steed from Bank of America Securities. Please go ahead.
And congrats Jason although things have gone and what can I Miss working with you as well.
And look forward to working with you to Jim.
No.
Omnipod five rollout I guess just to get a little more color on some of the initial feedback you've gotten from some of the initial users and trying to understand the cadence here of the lines like what's.
The next steps are you going to go to the retail channel all at once or a step by step and just a better understanding of that kind of the rate limiting factor on the rollout would be great. Thank you.
Hey, Travis, it's Brad I could give a little bit more color on the limited market release to full market release. So it's.
Really helpful to start with with the end and how we are defining the full market release, and we do define a full market releases being in the retail channel with JC centers, where 80% of our pharmacy businesses. Today. So this next phases with a limited distribution network and that just means mostly mail order and a smaller number.
Distributors, but it does mean that any physician can write a prescription in any patient that has access and reimbursement can get them product. They just have to go through a channel that maybe they're not currently go through going through the pharmacy channel. So it won't be a flip of this which is JC said, we will continue to progress in that way what's exciting.
I guess about this next phase is that it does test our scale. So we started with hundreds of predetermined number of patients in the LMR now we're going to start driving prescriptions scaling.
The release and it will continue to scale until we get to the full market release.
We will continue to learn and a lot of what we're learning today is around the pathway that patients take to get on product. If you remember we talked about the limited market release, and probably hundreds of different pathways, depending on what a user's current experiences with CGM with MDI, two pumps et cetera that they could take in a unique trait.
<unk> pathway for each of them. So some of the things. We're learning in LMR is just how to tweak that experienced a little bit to maybe set better expectations with some of those patients so that they when they start they know exactly what to expect with Omnipod five and we'll continue to learn but we're right on track to what we said we would do which is some time between three and nine months were three months in.
Now and we're excited about this next phase, but the next phase really is after this morning really is full market release. It will just progress till we get there which is a retail launch.
Okay.
Thank you.
And our next question comes from the line of Jeff Johnson from Baird. Please go ahead.
Thank you and Stacy had nothing but the best I just want you to know how much I. Appreciate it holding you up such a great example of professional success for my 17 year old daughter.
Yes.
Let me just ask a question outside the U S. I know a lot of questions on the U S O five launch, but outside the U S have you had any conversations with EU regulatory authorities at this point, just maybe any updated thoughts on timeline to CE Mark and how soon you could maybe flip over to commercialization. Once you do get CE Mark. Thank you.
Sure. Thanks, Jeff maybe just give you an update on the submission and then Brett can talk a little bit about the market development and market preparation for launch that's underway.
So we've had a lot of back and forth with our notified body and we believe that the submission is progressing very well no red flags and we were really well prepared because we had such a comprehensive FDA submission and also because our data was so strong that we do feel like we're in a really strong position the only challenge in terms of.
We are giving you guidelines for guidance or timing is just that the MTR pathway is a relatively new pathway both to us and our notified body. So that's the challenge, but we are making great progress and.
And feel very confident about that happening. It's just hard to give you. Some some particular timing on that and then there's been a ton of work underway preparing for market launch. So Brad if you want to provide some color sure, yes, hi, Jeff.
We're doing a lot of work now to prepare for the launch of Omnipod five outside the U S. In contrast to our dash launch if you remember when we got approval for Dash was pretty quickly that we rolled out.
To all of our markets internationally and very quickly got to almost 100% of all new starts on dash. The difference with only five is probably twofold. One there's there's infrastructure with the cloud it's going to be unique by country, depending on data privacy and different requirements. The other thing is reimbursement so the reimbursement pathway for each country is is <unk>.
Frankly, because this is a new category of product, where dash was simply the same category as our legacy products. So there's different reimbursement pathways different infrastructure that to consider and so youll, probably see more of a staged launch by country outside the U S. Once we do get clients.
Thank you.
Next question comes from the line of Steve Lichtman from Oppenheimer. Please go ahead.
Thank you Chase all the best to you and good luck Jim in your new role.
Wanted to also ask on financial saw some excuse me on international saw some nice upside there in <unk>.
One are you seeing some of the Omnipod five excitement is starting to build giving greater visibility that that it's coming with the CE Mark filing in U S approval, so seeing some pull forwarded.
As Brett mentioned.
Earlier with U S and it would seem that based on the second quarter guidance coming off with this better <unk> that you could be trending toward the high end of your your full year range. So overall, how you're feeling about that international business, even ahead of Omnipod.
Yes, Stephen I can I can comment probably on the first part and then pass it over to Wade for any color on guidance, but yeah. We were really pleased with how the international markets are performing.
Of course, there is a ton of optimism and excitement from Dupont five and it's why we are excited to be under CE, Mark review and we're working ambitiously to get it to market. It just like the U S. We know it will make a difference in new starts and in demand and that there is this desire to have the best form factor paired with an AAV system. So.
There's tons of interest outside the U S. We're trying to manage that with our current base and expectations with our partners over there, but that's why the work is so important that we get it to market and we're excited about the CE Mark and.
And again, we'll we'll plan accordingly, but we'll face the launch depending on readiness of each market considering the size and opportunity and what is excited to get there and maybe way you can talk a little bit about what that means yes sounds good as Brett said, we're doing very well competing with the form factor and so we've been in this low teens.
Double digits range now for a little over a year and.
It's a good double digit growth, but we know we could be growing faster. If we had our system as we've talked about we just don't participate in that part of the market today and so that's what's reflected in our Q2 guide as well as you mentioned, Steve for the full year and just a reminder, the second half of the year guide is a little stronger because we have a slightly easing comp.
Especially in Q4, and then the impact of the pandemic over the last four quarters, just to remind everybody with our annuity model.
<unk> and so even though the pandemic is easing we're still annualizing those quarters from last year and so as we do that throughout the year, you'll see our growth rates start to strengthen in the second half.
Thank you.
Our next question comes from the line of Danielle <unk> from Seb Securities. Please go ahead.
Hey, good afternoon, everyone and Stacy I can't even tell you how long Diane to hear that you are leaving.
And you will definitely see Matt you've been a girl crush of mine for a long time so.
So are you you'll stay my girl crash.
Just a quick one.
Waiting for a patient to become a lead and then we're reaching out to that particular primary care Doc and getting them started on.
The pod dash, but we also do call on a very small number of primary care physicians, but mainly those that sort of operate like an endocrinologist and write a lot of insulin prescriptions for instance, we get good information for my Cuba, We know who they are but we do want to expand more into that that segment. I think a couple of things are are the challenge with primary care. So we have to solve for one is.
Their willingness to tackle complexity and they see pump therapy in general is be more complex than they something they typically do today. So we have to solve for that virtual training. This way, we can do that the the simpler would make the product the easier. It is to onboard the pharmacy channel low co pays all those things were doing will help for sure. The other thing is just.
There's over 200000 primary care physicians of the U S. We obviously will have a sales force to tackle that so we'll we'll look to to penetrate primary care in the future through more direct to consumer more digital marketing and then ultimately you know better solutions and products that more to <unk>.
Think we fit that type two segment, but there's a lot of work to do there most of the success, we're having with type Tuesday is within the endocrinology segment, but we know the opportunities mass if we do get a lotta leads from direct to consumer.
Thank you.
Oh sure. It next question comes from the line of Stewart I'm Wrenched from city prescribed.
Good evening and May I also thank thank you and good luck and I don't know anything more than that I might start crying.
So.
Two quick questions what percentage of your new patient where type two and the second question has to do with your new patients that are coming on and you expect to see using Omnipod five are those transfer students from your current platform or do you see it pulling more patience from M D I and our tubes, perhaps.
Thanks.
Thanks, Joanne Yeah in my prepared remarks, I mentioned, 35% approximately of our new users were type too. So it's great to see continued really strong growth, particularly in a record I Q1, and as it relates to I pod five you know we've been pretty limited there. So it's a very small sample at this point relative to our total base. So we said you know.
Hundreds of patients and and they are coming from all segments. Because we wanted to test every customer journey that we can so we're install process of testing all those customer journey. So we've got people coming on from M. D. I from existing Omnipod users and also from I tunes pumps, and a I D pumps and manage.
[noise] to get really good insights across each of those customer journeys as we look ahead, we've talked about the fact that you know today, we get 80 per cent of our new users from multiple daily injections and you know it'll be really interesting to see what happens with that segment. I think we believe that Omnipod five has the power to continue to grow the overall market and bring great better.
Outcomes better quality of life to people, who are relying on multiple daily injections, but we also know that this is a a more competitive offering.
For those people, who were choosing a I D over form factor and now they can have both so we're pretty excited to see what that means for our percentages and our ratios and whether or not we have transfer students certainty students as we look forward. Thanks.
Thank you.
The next question comes from the line of Matthew Barney from <unk>. Please go ahead.
Afternoon. Thanks for taking my question in case, you hold perfectly okay manageable and best of luck to you don't forward.
You know just to follow up a little bit I'm. Joanna question. The comment about you know, maybe I think Brett mentioned, a little bit of a push on the dash side.
This quarter and thank you said type 235 per cent this quarter. It I just I don't Wanna make too big a deal with this but you know 35 to 40 is what you said last quarter. So what I'm really getting that is are you seem more type one patients coming on getting access through dash to get access to the omnipod five thanks.
Sure Great question, and I I think we'd likely are and that that was a breath point that in fact, you know the fastest way to get onto Omnipod five which we know today is indicated for the type one user is through Omnipod dash. So we do believe that part of that is what's driving our record new customer starts.
And also probably driving a slight shift in percentages, there, but I don't want to dismiss the fact that 35 per cent of our new users are type two.
The product Omnipod dashes still doing a tremendous things for that segment, bringing better outcomes instill obviously, an incredibly appealing product that's driving great growth there.
Thank you.
I was feeling next question comes from the line of Jason from Bedford.
Good.
[laughter].
Good afternoon, and the shakes here or wish you the best I Hope everything works out.
So I understand the current phase of the limited <unk> submit it was kind of touched on before but any physician can write a script for the user has to access to technology in the specialty channels kind of the the non retail pharmacy channel.
I'm just wondering if this suit of capacity on your card is it more of a reflection of your discussion with payers just wondering what you need to see before you you brought him a lot.
Hi, Jess Jason and spread I can give a little bit of color around that so yeah. It's.
Any physician can write as a prescription you write in any patient that has access to product. They just can't for instance pick up a prescription and walk down the street to the Walgreens or or C. B S and expect to get Omnipod at that retail location for now there's a couple of reasons why we would do this in and use this limited distributor network for the.
L. M. R and has expanded case available. One is you know, we just get better visibility who's starting you know once you start to ship product to the retail channel. It's out there and so we don't have as much visibility and that doesn't help us with our goal of really monitoring people that are coming on monitoring monitoring their experience and having the ability to <unk>.
Quickly reach out to them if necessary. So just keeps us closer to the the patient and it keeps us closer to the process, we get more feedback on their onboarding Ah pathway and it just gives us more comfortable with finally shipping product to the retail channel, which is again, how will define full market relief. So it's a it's a good step we we.
It does broadly open up access but at the same time helps us meet our goals of measuring and monitoring as we expand to the retail launch.
Thank you.
Showing the next question comes from the line of Margaret Casual William Blair. Please go ahead.
Hi, everyone. This is Brandon on for Margaret Thanks for taking my question and I would like to just echoed the sentiment from from the rest of the <unk> community and taking shows you for all your work and congrats on building a great organization here I wanted to focus my question on that type two pathway as well, we obviously saw.
Really encouraging data with Omnipod five at a T. T. D. So that was both an M. D. I N. Basil what are what are the next steps here for you to kind of keep moving forward getting it all <unk> to label do you need to make any software or hardware changes you need an additional trial, so I'm trying to understand the market or.
Can you kind of just roll into a pivotal so any any color you can give around there just understand at least the <unk>. The pathway. If we can't get a timeline on that thank you.
Sure. Thanks, Brandon Uhm, Yeah. The data was really strong it was really great to see you know our our feasibility study included type two users that we're at a pretty low baseline of control. So.
Mentioned, you know many who had not used the C. G M and only one who had used a pump so really representative of that broad type two population out there basslines red 32 per cent time in range for Basil only in 46 per cent in time in range for M. D I and depending on that cohort. We saw 30 to 50 per cent increase in in <unk>.
I'm in range, so quite extraordinary performance there. So I think overall, we feel like I'm wearing a it was the feasibility data accomplished what it did or what we set out to do which is demonstrated that this technology has probably enormous value in the type to population. So this supports our discussion is this.
Data supports our discussions with the F D. A H a determined the right size and design for our pivotal study and this is really the probably the wrap up of our feasibility study and then we will move into a pivotal we believe that pivotal study is likely to look very similar based on our early discussion is very.
Similar to the type one pivotal so hundreds of patients over three months looking at similar N points, but we need to finalize those discussions we're in discussions with the F. D. A and a number of fronts regarding type two diabetes and once we finalize that design and then start recruiting for the pivotal you guys will be the first to to know and I guess that.
Emphasize that in the meantime, you know we have this great product with with Dash, that's making a difference for people with type two that'll continue you know to drive value for us and it also continues to help us learn more and more about the condition population in the patient population that we're serving with type two.
Thank you.
I'm showing no further questions at this time I would not like to turn the conference back two shakes the petrol <unk>.
Thanks to Lamb at so I think you all know that it has been the honor of my career can lead the remarkable team at insulin and I know the company is in great hands with Jim leaving the organisation into its next chapter.
As you heard today insight is delivering terrific results and is poised for even greater growth and value creation for our shareholders in people with diabetes across the globe as we progress toward the full U S. Commercial launch of Omnipod five I am really excited to continue supporting and contributing to our success as a director and.
Adviser and fled is just getting started in our future is very bright. Thanks for your support your comments today and taking the time to join the call have a great afternoon.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day your nail disconnect.
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