Q3 2023 Insulet Corp Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the Insulet Corporation third quarter 2023 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 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 good afternoon, and thank you for joining us for inflows third quarter 2023 earnings call with me today are Jim Hollingshead, President and Chief Executive Officer, and Lauren Button, our interim Chief financial Officer and Treasurer.
The replay of this call in the press release discussing our quarterly results and our guidance will be available on the Investor Relations section of our website.
Also on our website is our third quarter supplemental earnings presentation. We encourage you to reference that document for a summary of key metrics and business updates.
Before we begin we would like to inform you that certain statements made by Insulet. During the course of this call maybe 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 will also discuss.
non-GAAP financial measures with respect to our performance, namely adjusted gross and operating margins adjusted EBITA 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're helpful to investors analysts and other interested parties as measures of our operating performance from period to period. 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 Jim.
Thanks, Beth good afternoon, and thank you for joining us.
Q3 was another strong quarter for Insulet with rapid growth and achievement of many strategic milestones.
Thanks to our global team's execution dedication and focus we are on track to complete another transformational year and enter 2024 with significant momentum.
On today's call I want to do three things to discuss our financial results and market traction.
Provide an update on our continuing progress in clinical and market access work and review key developments in our innovation pipeline.
Our third quarter revenue exceeded our expectations with total omnipod growth of over 27%, including U S growth of 35%.
We also achieved total company growth of 25%.
These are remarkable results, especially coming in the context of our strong prior year Comparables.
As a result, we raised guidance once again for the full year.
Performance was driven primarily by the huge success of Omnipod five our revolutionary automated insulin delivery system.
It is gratifying to see the positive impact Omnipod five is having as it continues to simplify and improve the lives of people with diabetes.
And we are only in the early innings.
Q3 represented the anniversary of the U S launch of our Omnipod platform.
Omnipod five is the only FDA cleared fully disposable pod based AIB system.
And it continues to transform diabetes management.
Its simplicity ease of use widespread and affordable access and improve real world outcomes of made Omnipod five leading AIG offering on the market.
With the added benefits of U S pharmacy channel access pay as you go model and an easy Onboarding pathway Omnipod five makes it simple and efficient for health care practitioners patients and payors to conveniently prescribed access and afford our breakthrough technology.
We are now also beginning the global rollout of Omnipod five in our international markets, starting with the U K. This past June.
With one full quarter under our belts in the U K, we are seeing very strong early adoption.
In Q3, Omnipod five drove accelerated new customer starts in UK, taking revenue growth to almost 45% year over year and driving approximately 70% sequential growth in new customer starts.
It's a strong early sign of the global power of Omnipod five to transform diabetes care.
During Q3, we also commenced the rollout of Omnipod five in Germany in August and early momentum is exciting.
Based on these results we are confident that omnipod five will emerge as the market leading offer everywhere. It is available.
The success of Omnipod five led to another outstanding quarter of new customer starts both in the U S and globally.
In the U S. Omnipod five continue to represent the vast majority of our new customer starts in Q3 and customer retention remains strong.
In the U S. In Q3, Omnipod, new customer starts coming from multiple daily injections and legacy tube pumps was an estimated 80 20 percentage split which is in line with our historical mix.
Romney pod was specifically designed for individuals on MDI and as expected we are driving pump penetration across all age groups in both the type one and type two markets. While also growing our share positioning insulet is a leader in these markets. We estimate that we are the clear leader in bringing customers into the market from MDI.
In addition to growing awareness of Omnipod and high product demand among patients a growing number of hcp's or writing scripts for it.
In Q3, we saw another increase in prescribers growing to over 17000 up from over 15000 in Q2.
In a market where there are 7000 to 8000 endocrinologists. This shows the broad appeal and ease of prescription of Omnipod five.
Importantly, this extensive reach is critical to access patients who were not seeing at the high volume pump prescribing clinics that historically defined the pump market.
Omnipod Five's broad appeal is also evidenced by the growing number of scripts that these hcp's right for our system.
Omnipod loyalty amongst potters has been a hallmark of our brand for many years and it is great to see the growing demand and confidence amongst the prescribing hcp's.
In fact, an increasing number tell us that when given the choice their patients overwhelmingly choose omnipod.
Our results in Q3 also strengthen our conviction that we'll be able to reach the millions of people with type two diabetes, who need insulin therapy as a part of their care.
In the quarter Omnipod adoption in the type two market continued at a steady pace with type two patients representing approximately 20% of our U S new customer starts.
These new customer starts come from across our Omnipod portfolio of products, demonstrating the clear benefits that our products offer the type two population.
Omnipod dash continues to be the leading insulin pump offer with an indication for use in the type two market.
While we can't yet market Omnipod five for type two the obvious underlying demand for AIB in the type two market is encouraging and we look forward to bringing omnipod five to these customers. Once we complete our pivotal trial and secure an extension to our existing indication for use.
And to that end, we are very excited to announce that we have reached our enrollment goal. This week and our U S type two pivotal study.
As a reminder, this is a study of up to 400 participants with a 13 week protocol comparing omnipod five two participants previous therapy.
The feedback from Hcp's and steady participants continues to be very strong and strengthens our confidence that omnipod five will have a big impact and the critically underserved population of type two patients who require insulin.
We will provide further updates as the trial progresses.
I'd like to make a few comments about the ongoing debate about the impact of <unk> on our markets.
As we've made clear we regard the <unk> one class of drugs is an important innovation for people with type two diabetes and they had been indicated for use in type two diabetes for several years.
These drugs how many of the same patients we aim to help and we applaud their innovation.
Further as a reminder, we believe <unk> do not materially impact our end markets. They are not indicated for use in type one diabetes, which is an autoimmune disorder and there is no mechanism for them to impact the course of type one as a condition.
Likewise, there was no apparent mechanism for <unk> drugs to alter the underlying progression of beta cell decline that is characteristic of type two diabetes.
Last month, we published a short slide presentation going into these issues in more detail.
This week, we published an update to those slides based upon data that was recently presented at EAN SD.
And a large retrospective study of 23000 users semi glu tied the evidence presented suggests three important conclusions first chairman Lu tide has almost identical impact on glycemic control as liraglutide in terms of the magnitude and duration of <unk> reduction.
Second this will world evidence shows a very clear relationship between dose adherence and glycemic control such that only the most adherent users receive the level of benefit that has been demonstrated and more controlled clinical settings.
Finally, and importantly weight loss and the persistence of weight loss for <unk> users in the study was demonstrated to be independent of glycemic control.
In short real World evidence shows that patients using semi gloop guide continue to have their diabetes progress with limited or no incremental duration of effect over previous drugs.
And type two diabetes continues to progress even with weight loss.
For those who are interested in more detail. We refer you to our updated presentation, which is available on the Insulet investor page.
These data reinforce our existing view.
Because the underlying disease continues to progress most people with type two diabetes will eventually need to incorporate insulin into their therapy.
Insulet is incredibly well positioned to serve these customers as they progress in their condition and needs to add first basal and then intensive insulin into their treatment.
We are already winning in this market and we continue to have strong conviction that people with type two diabetes represent a large and underserved population.
We are continuing our efforts to bring the full power of our broad portfolio of insulin delivery options, including Omnipod Dash Omnipod five.
If I go which I will come back to in a few moments.
In.
<unk> to our type two pivotal trials, we are progressing several additional clinical initiatives.
We are pleased to have completed the protocol with the last participant in a randomized controlled trial using omnipod five with <unk> six.
We're in the process of analyzing and preparing the data, which we expect to show the clear benefits of Omnipod five therapy over non Aig's systems.
We are also making great progress with the Radiant study, which is our libre two integration trial for which we began enrollment in September.
Clinicians have remarked about the simplicity and ease of transition for MDI users to omnipod five in the outpatient setting.
Including in regions, where it is often the norm for AIB therapy to occur in the hospital for days due to the complexity of existing tube pump offerings.
We are excited that our integration with Abbott's Libre two sensor has advanced to the point where study participants are using the system.
Both of these studies will provide the evidence we need to drive pricing and market access initiatives as we launched omnipod five across our international markets.
I would now like to turn to three key areas of innovation for us expanding the Omnipod five platform.
Moving upstream in the type two market with Omnipod go.
And driving the future of AIB with our advanced algorithm program.
The widespread success of Omnipod five makes it easy to forget that the current version of our offering is in some ways our minimum viable product.
In order to achieve the full promise of the platform. Our aim is to expand on customer choice both for phone control and for CGM use.
In that context, we are excited to have received FDA clearance for our five 10-K for the Omnipod iOS App.
This is another major innovation milestone for Insulet and iOS as one of the most requested features from our customers.
We are thrilled to have the opportunity to provide the iOS option to our existing omnipod five customer base as well as future customers.
Because the iOS app represents a completely new software platform, we expect to begin a U S limited market release in early 2024 and upon successful completion, we will make iOS for Omnipod five broadly available as soon as possible.
With regard to the CGM, our efforts to expand our sensor integrations with our partners at <unk> Com and Abbott continued to steadily progress.
I've already mentioned, our progress with Libre sensor integration in the context of our European trial. We are also hard at work to complete our integration with <unk> <unk> sensor and we are excited to announce that we are planning for a limited market release of Omnipod five plus G. Seven also in early 2024.
Omnipod five as the market leading offer on what these coming innovations. We are confident we will be able to maintain and extend that leadership.
A key innovation effort that moves us upstream from AIG is Omnipod go which is designed to radically simplify the initiation of basal insulin therapy for people who need to start insulin type two diabetes progresses.
Even small penetration into this market will meaningfully contribute to our long term growth trajectory.
We have commenced the commercial pilot for Omnipod go in the U S, which includes HCP. We don't typically call on who are new to Omnipod, most of whom who are primary care physicians.
Our commercial pilot is providing us with the opportunity to present Omnipod go and also to educate <unk> on all of our Omnipod offerings.
Although early in our pilot Dcp's are telling us the pod therapy is much easier than pump therapy as.
As a result, these hcp's want to learn about the entire omnipod portfolio.
We expect both Omnipod go and Omnipod dash to make the treatment pathway far easier for these type two patients.
Learnings from our ongoing Omnipod go commercial pilot will help us to refine our plans for commercialization in 2024.
We are continuing to progress work on our next generation AI algorithm with our evolution feasibility trial, which we began earlier in the year and which is being conducted in New Zealand.
The goal of this feasibility study is to test potential enhancements to the Omnipod five algorithm in order to further drive simplicity of use.
We've been able to launch this study very early in the lifecycle of our AIB offerings, specifically because of the unique aspects of Omnipod five both because we on market algorithm is highly effective and because of our ability to gather actual usage data from essentially the entire population of omnipod side users.
We expect that cloud connectivity of Omnipod five coupled with our data sciences capabilities will allow us to materially accelerate our algorithm development efforts over time.
Finally, an important update on our intellectual property portfolio, which is a key asset enabling our continued growth.
In August we filed a suit in the U S against airflow and other affiliated parties to stop the misappropriation of influence proprietary trade secrets.
Last month after requesting preliminary relief and obtaining some initial evidence the court granted our request for a preliminary injunction against <unk> flow, which prohibits <unk> from manufacturing marketing or selling to any new customer any product that was designed developed or manufactured using overlying on insulet trade secrets.
<unk>.
The court also extended the prior injunction issued to restrained flow from disclosing to any third party information obtained derives from or incorporates insulet is confidential information.
In granting influence motion the court found quote very substantial indeed strong evidence of misappropriation and quote and quote that insulet is likely to succeed on the merits of its trade secrets claim and quote.
We have invested considerable resources over many years developing our omnipod products and we are confident we have a clear lead technically and in terms of scalability.
We will continue to vigorously defend our IP to protect those investments.
In closing, we completed another outstanding quarter, and we have sustained momentum across our business. We are enjoying continued rapid growth in the U S type one market and we're seeing accelerating adoption in our international markets, where Omnipod was launched we are also seeing continued growth in the type two market across our.
<unk> offerings.
We are excited about the catalysts coming in 2024 with iOS functionality CGM integrations and Omnipod go that unlocked a lot of market growth for many years to come.
I want to thank our entire Insulet global team for their engagement and hard work as we continue to drive our mission to simplify life for the millions of people with diabetes around the world.
Before I turn the call over to Laura I want to welcome and congratulate her on her role as our interim CFO and treasurer.
Lauren as our Chief Accounting officer, and has been with Insulet for close to five years.
She has long been a key member of our finance team and has contributed significant value to the company and to shareholders. During her tenure with us.
We're thrilled to have Lauren in this role to support our continued execution of our strategic priorities with that I will turn the call over to Lauren.
Thanks, So much Jim it's an honor to serve as interim CFO.
As Jim shared Insulet achieved another quarter of robust growth financial performance and strategic progress.
We once again delivered strong global new customer start fueled by huge demand for omnipod in the U S.
Yes.
And we are seeing a very nice uptick in new customer starts in the international markets, where we launched Omnipod <unk>.
As a result of our growing customer base, we delivered 25% revenue growth in Q3.
This is above the high end up our guidance range.
Our outperformance was driven by global Omnipod growth of over 27%.
On a reported basis for total revenue.
Foreign currency was a 180 basis point headwind compared to Q3 last year.
U S Omnipod revenue growth was 35% and exceeded our guidance range.
Revenue growth continues to be driven by our annuity based model and growing U S pharmacy volume.
This includes an increase in volume contribution from Omnipod side, and Omnipod dash and the related premium for pods in the U S pharmacy.
Pharmacy channel access continues to be a competitive advantage and we remain focused on driving increased volume through this channel, which in Q3 represented between 90 and 95% of our total U S volume.
Tommy <unk> dynamics resulted in an estimated net tailwind of approximately $10 million, which is in line with what we expected for Q3 guidance.
As a reminder, since our launch we have realized a recurring net volume benefit from new customers as well as from Omnipod customers converting to omnipod side, many of whom breaking into their starter kits and first refill orders in the quarter plus some initial stocking and retail pharmacies.
Our estimates have been net of both Omnipod five customers, who stepped in order in the period.
In Q3, as we expected the volume benefit from conversion has been normalizing and was therefore immaterial as the majority of our existing customers already switched to Omnipod side.
Going forward, we expect continued benefit from the two scrip dynamic as we drive omnipod by new customer starts.
In Q3 U S attrition and global utilization remained stable.
International Omnipod revenue increased 8%, which was above our expectations.
Growth was primarily driven by continued strong adoption of Omnipod dash and to a smaller degree incremental benefit from Omnipod five launch in the U K, which drove a notable increase in new customer starts.
These benefits were partially offset by slightly higher attrition as we continued to be impacted by aig's competition, including lower distributor orders.
On a reported basis foreign currency was a 720 basis point tailwind over the prior year.
That's what Liberty revenue declined, 27%, which was slightly below our guidance range due to a lower forecast from our partner.
Gross margin was 67, 8% up over 200 basis points and included income of $1 $9 million due to lower estimated costs associated with the medical device correction, we announced last year. When we took a charge of approximately $37 million in Q3 last year.
Excluding <unk> gross margin increased 120 basis points to 67, 3% in Q3 of this year.
This exceeded our expectations due to favorable manufacturing costs and higher than expected revenue.
The year over year increase in adjusted gross margin was primarily driven by improved manufacturing efficiency and a premium from volume growth in the pharmacy channel.
These increases were partially offset by expected higher production costs and U S manufacturing continues to ramp and become a larger portion of our total production.
Operating expenses were up year over year in line with our expectations as we invested in our business to support our strong growth trajectory.
Adjusted operating margin was 12, 2% and adjusted EBITDA was 19, 1%.
Both exclude the favorable medical device correction adjustment of $1 9 million and were above our expectations due to higher than anticipated revenue and gross margin.
Turning to cash and liquidity.
We ended the quarter with $685 million in cash and the full $300 million available under our credit facility.
This strong financial position gives us the flexibility to invest in our innovation pipeline and other key areas of our organization in order to build on our foundation for long term sustainable growth.
Now turning to our 2023 outlets.
For the full year, we are raising our expectations for total omnipod revenue growth to a range of 29% to 30%.
Total company revenue growth to a range of 26% to 27%.
For U S. Omnipod, we are increasing our revenue growth outlook to a range of 37% to 38%.
This increase is primarily driven by continued strong omnipod five adoption stemming from consecutive strong new customer starts and to a lesser extent ongoing conversions from other omnipod products as well as from recurring revenue for Omnipod dash and the benefits of our pay as you go model in the pharmacy channel.
As a reminder, Q4 of last year was the first full quarter of Omnipod five sales contributing to a tougher comparison in the fourth quarter of this year.
The prior year included the two script benefits, which was a large part due to the accelerating pace of customer conversions in the second half of 2022.
It also included retail channel stocking.
For International Omnipod, we are raising the low end of our guidance range and now expect 9% to 10% growth.
On a reported basis, we estimate a favorable foreign currency impact of approximately 100 basis points.
We expect growth will be driven by ongoing omnipod dash adoption as well as the benefit from our Omnipod five launches in the UK and Germany, partially offset by AIG competitive headwinds.
As a reminder, given the nature of our annuity model, we expect omnipod five to more meaningfully contribute to our growth rate in the second half of 2024.
For drug delivery, we are reaffirming our guidance range of a 45% to 50% decline.
Turning to 2023 gross margin.
We are raising our adjusted gross margin expectation to a range of 66% to 67% and expect to achieve the midpoint of this range.
The increase from our prior guide is driven by improved manufacturing costs as well as higher than expected revenue, including favorable mix.
Although certain headwinds that we experienced during 2023 will carry over into next year, we expect to see further gross margin improvement in 2024.
We now expect adjusted operating margin in the range of 9% to 10% given our revenue and gross margin outperformance.
We remain committed to margin expansion and anticipate leveraging our investments in 2024 and beyond.
Turning to our fourth quarter 2023 revenue guidance.
We expect total Omnipod and total company growth of 22% to 25%.
Our U S. Omnipod, we expect growth at 28% to 31%.
Even with the challenging comps due to the Omnipod five full market release in August of last year, our new customer start momentum and the benefits of our annuity model continued to fuel our revenue growth.
Including strong expected sequential dollar growth in Q4.
For International Omnipod, we expect growth of 5% to 8%.
On a reported basis, we estimate a favorable foreign exchange impact of approximately 300 basis points.
Finally, we expect Q4 drug delivery revenue to be approximately 3 million to $5 million due to timing of production and orders.
We have sustained momentum across our business and we are poised for another strong year in 2024.
While we will provide formal 2020 for guidance on our Q4 call in February I will provide some color now on how we are thinking about 2024, given the strong momentum we see in the business.
We anticipate another year of large dollar growth in 2024, even with the significant volume benefits realized in 2023 from our Omnipod five ramp.
Our U S. Omnipod, we expect a growth rate within the mid 20% range fueled by only five and its strong pace of new customer starts as well as our annuity model and pharmacy channel access.
For International we expect continued growth with Omnipod dash and more meaningful growth towards the second half of the year from our recent omnipod five launches in the U K and Germany.
We expect continued headwinds in the countries, where we do not yet have occupied five to partially offset this growth.
All in that puts us somewhere in the high single digits for the year with the second half of the year accelerating to a range of high single digits to low double digits.
For drug delivery, we expect to see a decline and at the high end of the forecast, we expect the declines to be lower than in 2023.
In conclusion, we delivered another quarter of solid financial performance and we further positioned insulet for continued momentum through the end of this year and beyond.
As we continue to capitalize on the global market opportunity and invest in innovation, we're poised for another strong year of customer base growth and revenue growth.
Opportunities of this magnitude are few and far between and we are very well positioned to drive long term value creation for our shareholders.
With that operator, please open the call for questions.
Thank you if you have a question at this time. Please press Star then the number one on your Touchtone telephone.
If your question has been answered or you wish to remove yourself from the queue. Please press star one again.
We are limiting each participants question to one however, please feel free to go back into queue and if time permits we will be more than happy to take your follow up questions at that time.
Our first question comes from Robbie Marcus from Jpmorgan. Please go ahead. Your line is open.
Hi, This is rohit on for Ravi Congrats on a really nice quarter.
So there are several exciting developments you outlined on deck for 2024 between CGM integration iOS launch.
And continued international expansion and thanks for providing that color on those preliminary targets for next year as well.
My question is more related to how we should think about the growth contribution from each of these tailwind next year and the puts and takes and what's assumed in those preliminary targets that you outlined.
Yeah.
Thanks, Ron we're really excited about the growth catalysts that we have coming we've obviously got great momentum.
Continuing to drive really strong momentum in new customer starts in the market really well positioned and we're very excited about.
Getting into the limited market releases for both iOS and <unk> seven early in the year and also really excited about continuing.
<unk> progress with Libre integration, so we think they will.
I think they do drive continued growth for us.
Yes.
In terms of the guide we haven't really guided on a number for that.
Early in our color, but we do think it opens up a lot of a lot of potential growth for us.
Across the board.
They're all important.
I wouldn't want to necessarily weigh one over the other so we think that all drive catalyst, but I'll ask Lauren and Deb, if they want to add any color to that.
Sure. Thanks, Jim So yeah, we haven't factored that in but given our annuity model as Jim said, it's not expected to be a meaningful contribution and we're just entering an LMR in the beginning of the year.
Our next question comes from Larry Pete Wilson from Wells Fargo. Please go ahead. Your line is open.
Hi, This is Charles on for Larry first congrats on the nice quarter and.
I wanted to ask if you said this already did you say new patient starts were a record worldwide did I hear that right and then I got a quick follow up.
New customer starts were really strong not quite a record.
And so the second.
We're not we don't want to get into the table ranking all of our quarters, all the time, but.
It was our second highest quarter ever of new customer starts just coming in behind Q2 was kind of a blowout quarter for us on new customer starts where everything hit on every cylinder so really happy with a new customer starts with not quite a record.
Okay. Thank you and just a quick follow up wondering if you might be able to give any update on the search for new CFO. What exactly are you are you looking for there and I Wonder if you could give a possible timeline you might hope to have.
<unk> spent there.
Sure Charles first of all we're really happy to have learned in the chair she is.
She has been with us for a long time, she is such a great contributor to the company into senior finance statements.
Really.
Really blessed to have somebody of Lauren's caliber to step into this interim and.
We're conducting a search.
Just out of the market now with the surgery it wouldn't affect.
And I don't really want to talk about the characteristics and so on the word before we think that the CFO job here as a really firm job. We have internal candidates were really strong including Lauren and.
Early look at the market looks really promising we want to move as quickly as we can because we want to get to some stability there, but we're very confident we will get the right person in the world.
Our next question comes from Stefan <unk> from Bank of America. Please go ahead. Your line is open.
Hi, Congrats on the good quarter I wanted to ask more about margins, which were really strong in the quarter and throughout the year, that's been showing improvement each quarter. So.
I appreciate the revenue color you gave on 2024, but.
If there is any color you could share on margin for next year that would be helpful. Maybe any of the puts and takes to consider there. Thank you.
Thanks, Thanks, Stephanie I'll turn it to Loren on that go ahead I'm sorry go ahead go ahead.
So we're not providing guidance today, but just a little color. We are committed to expanding our margins. We're thrilled that we increased gross margins for.
For the full year of 23% to 66% to 67% and we are also very thrilled that we increased the high end of our operating margin guidance range as well. So we're very focused on increasing those and we would expect that trend to continue going forward as well.
Our next question comes from Jayson Bedford from Raymond James. Please go ahead. Your line is open.
Hi, Good afternoon. This is.
Jason on for Jason.
So big picture.
The physician or user discussions changed with greater GOP adoption I'm. Just wondering if you changed your marketing strategy in any way and then just quickly as a related follow up can we assume that the year over year growth in new type two users was higher than your overall U S. Omnipod grew.
Thanks.
Hi, Jason do you start to say hi to Jason when you see them, Jason sorry, thinking apparel jokes.
Oh.
Yes, no it hasn't we haven't changed our marketing message at all Omnipod five and Omnipod dash are so effective in insulin delivery.
Pilot with Omnipod go as we're learning a lot it's going it's going well.
GOP ones are out their GMP ones have been indicated for some time in the market and so we haven't we haven't changed our messaging.
I think that we continue to learn about <unk>.
And if we need to adapt our messaging, we will but we haven't we haven't had to change our messaging. We continue to obviously have a lot of success can you remind me of the second part of your question there Jason.
It looked like take two was strongest in terms of <unk> adoption.
Can I assume that it grew faster, but just look at the number of type twos added in <unk>. This year versus last year. It feels like it's faster than overall omnipod growth, there's a way to.
Bless that assumption that will be Greg.
I agree with I'm not sure I would jump to that split go ahead go ahead Lorne I was just going to say it grew about the same.
Okay.
Our next question comes from Patrick Wood from Morgan Stanley. Please go ahead. Your line is open.
I was going to make a joke about it because somebody else, but the occident kind of gives me why I'm afraid.
Thanks for taking the question.
I was just curious like big picture not about 24, just slightly longer how the launch in the U K and I guess some of the folks around Germany, how youre thinking.
Time line to returning to double digit growth U S could look and is there anything you're seeing in those markets that would.
Prohibit you from Reaccelerate in his opening slide pushes through that that region. Thanks.
Thanks, Yes, we're so excited about getting on me about 5% in multiple markets in Europe as.
As we said as we detailed in the prepared remarks, you can launch is going really well, Germany is strong out of the gate.
In direct answer to your question, we don't see any barriers to driving really strong and robust growth.
Or are we launched Omnipod five.
And then I think I said in the prepared remarks, we're very confident it's going to be the leading offer wherever we're able to put it in the market. So.
It's such a great solution.
So easy for customers to use their drive such great real World results and as we get more evidence we can drive drive access conversations. We're also confident we can get a price premium for the value that omnipod five creates and so.
So we're all systems full.
Full speed ahead, and getting into our international markets, where there will be five.
Yes.
Our next question comes from Jeff Johnson from Baird. Please go ahead. Your line is open.
Thank you good afternoon, guys a nice quarter.
Jim maybe if I can pin you down on a little bit more detail on the sensor integration side.
So in LMR on <unk> integration in the U S early in the year.
No it's going to depend on what you see in the field what the feedback is and all that but just generally do we tend to think of LMR as I could go back and check my notes I guess in all five is that like a three month LMR and then a full launch or just how to think about that and then on the L. Two front. Obviously you gave some updates internationally how should we think about the timeline <unk> two in the U S.
And L. Three O U S and the U S. Any updates there at all just once L. Two comes out integration is it a six month of the year, how far down the road might we see all three thanks.
Yeah. Thanks, Jeff I'll go in reverse order when we're not providing additional guidance on timing for the Libre family of sensors at this point, we do feel good about the integration, we have going with our radiant trial and.
And the customer experience and the radio which is the libre two integration that we're doing in Europe. The customer experience on the Radian trial has been terrific and so we're very bullish on that and obviously to be in trial with that system. We have to have a working integration. So.
So we're bullish on that but we're not ready to provide timing on libre for any for any specific markets at this moment.
On the LMR question. It's a great question, we don't we think of LMR as exercises to test hypotheses and make sure. The system is working the way we wanted to so we don't actually put.
Timeline on it we put a set of conditions on it and so as we get into market with LMR, we'll see what we see.
Obviously, we wouldn't be going into LMR with the <unk> integration, if we weren't confident that the system is working as expected but.
With all of these things you have to get.
To get the product out in a while to see how it performs and so we've got the <unk> out there and we'll move as quickly as we can and we're really excited about bringing that to seven integration market.
Our next question comes from Matt Taylor from Jefferies. Please go ahead. Your line is open.
Hey, Thanks for taking the question.
I guess I wanted to ask you more about your efforts in <unk>.
Type two obviously, you're having some good success, there today with 20% coming into the fold and that being.
Consistent level over time healthy level.
But I guess my question is as you get.
Hopefully additional indications that are able to market do you expect the proportion of type two to increase in the future maybe offer some thoughts on where that could go to and also could that even further broadening the prescriber base.
That.
Okay.
Thanks, Matt those are both great questions first thing I'll say is we're so strong in type one alright, so our offering in type one is bringing so many customers into the market from MDI that we expect to continue to drive penetration of the type one market and bring those customers who are currently not on on a technology based solution.
Onto pod therapy, and so and therefore that portion of the growth will continue we're very bullish on growing MDI in type one type two is massively underpenetrated market and we've been through the numbers on this a couple of times and it's in our deck that we put up our investor deck that shows the market size for type two the progression of type two disease.
We've got 30, some odd million people diagnosed with type two in the U S to then progress on the basal and then onto intensive insulin therapy right. Now there are about $2 5 million people in the U S market, who need intensive insulin as a part of their type two diabetes care and Theyre, just really underpenetrated as a market for pump therapy overall and therefore.
For pod therapy.
And we're very very bullish on that so if you think about will continue to penetrate type one type two is actually a larger end market for intensive insulin therapy type one so the proportion I do think to your point the proportion will probably swing as we're able to get the indication for use and drive adoption in the market, but the numbers will go up the total adoption number of cut.
<unk> will go up on both fronts.
Our next question comes from Matthew O'brien from Piper Sandler. Please go ahead. Your line is open.
Hey, this is Phil on for Matt Thanks for taking our questions and congrats on the quarter just way to Jim as we think about the key growth factors for the business being on the volume side of things the ratio of MDI conversions as March from 50, 40% to now 80 20 in the U S are you seeing any kind of slowdown.
And your ability to convert competitive pumper also if you could provide that same ratio in <unk> given the launch there what does that MDI conversion ratio looked like in Europe.
Thanks Bill.
Yes.
Q3 doesn't look hugely different from Q2 in terms of the mix of components are where customers are coming from the only difference was and if I just back up I'll go into the weeds for a second I apologize for getting into the weeds. When we talk about sources of customers whether its type one type two.
MDI competitive conversion, we have different sources of data that allow us to estimate that.
Including voluntary so when a customer enrolls on omnipod, they will tell us where they're coming from usually so it's voluntary information, it's not 100% data capture and what that means is there is a little bit of an estimation kind of range on those things and so Q3 compared to Q2 didn't look all that different the only thing that was different enough for us.
It changed the number was competitive conversions.
<unk> said last quarter, we said it was $75 25 in this quarter, we said 80 20, but even that in terms of total number and range of estimate was not that huge change and we.
We've been really happy with competitive conversions over the course of the launch of Omnipod five, but we were really clear it launched it.
The number the volume of people converting from tube pumps that was a pleasant surprise for us and we sustained that for a long time and probably a little longer on balance kind of above historical trends of 80 20 sustained it for a little longer than we thought so it's not really a surprise for us to get back to that 80, 20 mix and what it means is we continue to bring.
We are the clear market leader in bringing customers from MDI onto you could talk about again, the broad category of of AIB, but onto AIG pod therapy Omnipod side, we're the clear market leader in bringing MDI into the market and we're still taking share out of the installed base of two pumps.
And so so we don't really see anything in the data and out in the market, we see a lot of promotional activity, but we haven't our field does not really reporting any move that's making it harder for us in any way to convert people off of their tube pump experience because omnipod five alright and for that matter Omnipod dash are so compelling.
So that's maybe a long kind of more in the weeds answer than Youre looking forward, but that's that's how we see it on the European side of the question.
I think we're going to see that different market by market and in fact in the U K, what we see as different hospital by hospital. So in some instances the NHS trust hospitals are tilting more towards new customer starts with Omnipod five in some cases, they're tilting more towards upgrading from Omnipod dash is a mess.
Mix on balance more conversions than new customer starts a little bit of that is driven by physician preference and a little bit of that is driven by the hospital budget for.
For the year and so I think we'll see.
And I think it will look a little different in Germany, and I think we'll look a little different as we get into into other countries.
As a reminder, the contracting in Europe locks everybody into a contract so in the U S where the pharmacy channel, it's easy to convert from a tube pump onto omnipod products and most of the European markets, whether you're on an omnipod dash or you're on a tube pump.
Locked into a contract for a period of time. So for example in the UK. It's at the discretion of the hospital to upgrade somebody to an omnipod side, and so that market behavior will look a little bit different market by market. What we do know is that omnipod five is.
Just the pent up demand for Omnipod five in our European markets is really strong and you can see the results already in the UK.
Our next question comes from Margaret Taser from William Blair. Please go ahead. Your line is open.
Hey, good afternoon, thanks for taking the question.
I wanted to talk a little bit about Omnipod go I think you had mentioned that you're maybe seeing some pull through in sales for the whole Omnipod family. Even early on so is there any more detail around that.
You are seeing and how that relates maybe to the long term commercial opportunity.
A patient per account basis, or however, you look at it and then as a follow up for tough snake through.
As you think about 2024 guidance are you assuming any of that benefited from that pull through our direct sales from its IPO.
Okay.
Thanks Margaret.
I'll do them in reverse order, we havent put anything formal into the guide out of out of the Omnipod go pilot and we're still planning. So this is not even yet a limited market release, it's a commercial pilot and so we haven't tried to quantify that or include any of it into the color that laurent provided or the guidance.
<unk>.
I'm really pleased that we're piloting in the way we are because we are doing exactly what we wanted which is we're learning a lot.
And.
I would say kind of a pleasant surprise as we get into these PCB practices and talk to them about the offering that not only do they recognize the targeted patient profile for Omnipod go as we characterize it but as we explained Omnipod go and they see the ease of use of Omnipod go they ask us about the broader.
Product portfolio and I don't think we anticipated that that that would be happening and so it's.
And what it tells US is that Omnipod therapy generally is so simple to use that it should open up the conversation and primary care what were using the pilot for us to figure out what are the mechanics of that right. So what does it look like how many reps what's the call pattern.
In the bag.
And we're testing things like the target patient profiles and things like that and so I continue to think of it as early days, but the learnings from the pilot have been really really productive for us as we think about how to approach type two patients and the primary channel.
Our next question comes from Joanne Wuensch from Citigroup. Please go ahead. Your line is open.
Good afternoon. This is actually happening on for Joanne Thanks for taking our question.
Just a quick easy one here I just want to confirm that the $10 million this quarter that was associated with the omnipod.
On the classified ramp dynamics I, just want to confirm that was a tailwind.
And then are you providing any guidance on what this number could be next year, whether it's calendar headwind. Thank you.
Yes, so the $10 million less than the double script phenomenon and what's different now is that conversions is really a small component of that so it's really immaterial. So going forward. We expect the double script phenomenon to continue but it's really just part of our normal growth rate going forward on new customer sites.
Our next question comes from William <unk> from Canaccord Genuity. Please go ahead. Your line is open.
Hi, This is Caitlin <unk> on for Bill and congrats on a great quarter, just dig into U S competition, a little bit more it seems like.
There's been a few new entrants into the market this year and updates and potentially some early next year. How are you thinking about kind of the competitive landscape 14 pumps and then also kind of for patch pumps and development going forward. Thank you.
Hi, Carolyn.
We're very confident in our competitive position Omnipod five with the <unk> sensor is the best AI offering on the market and what we see coming and competitive pipelines, we think nothing nothing in competitive pipelines is as good.
As Omnipod five with <unk> and so now that doesn't mean that there won't be competition as I said earlier, we see our competitors out there is a lot of promotional activity around from some of our competitors, we see that out in the world. We haven't really seen it impact our results at this point now.
Competition always.
First of all I think competition is great for business. It helps everybody learn.
<unk> and develop better products and that helps customers have better experience, which is what we're all trying to do.
And so we know theres going to be competition, we know our competitors continue to try to innovate.
But we're very very confident in our competitive position in our growth profile and Thats why were so excited about the growth catalysts, we have coming.
In 2024.
As the patch pump companies.
Patch pumps, we're the leader in patch pump theres, not really a viable patch pump competitor that we see on the horizon.
And so that's another reason that we're very very bullish on our position and expect to continue to lead the market.
Our next question comes from Mike Kratky from Leerink Partners. Please go ahead. Your line is open.
Okay.
Hi, everyone. Thanks for taking our question so regarding the ongoing <unk> pivotal trial for Omnipod five how are you thinking about how that could impact the commercial opportunity for this product over the next few years and what are the other main drivers that you expect to increase penetration within the insulin intensive type two patients that remain so underpenetrated.
Thanks for the question.
I'm very excited about the secure trial and as I said in our prepared comments.
We've completed the goal for recruitment and so just to be clear what that means that trial is designed to be up to 400 patients, but it has a minimum number of patients.
That are required and so we crossed over the hurdle for the minimum number of patients and the way to think about that is it de risks the trial from an enrollment point of view. So we now are starting to have enough patients to successfully complete the trial enrollment is still open. So we will continue to enroll some patients for the next little while because it's always better to have more more patients in the.
Trial, rather than fewer but so the trial is de risked operationally now with enough patients into get to get our powered result that we need and.
And we will continue that will continue the trial and then.
So essentially protocol once the last patient is and they'll complete that Theyre Jimmy protocol will gather the data clean the data will.
Prepare a submission and so on and then that'll be in the hands of the FDA and that will be a huge unlock for us in the type two space. We're already the market leader in type two with Omnipod Dash Omnipod Dash has had an indication for use in type two.
For some time and.
We've been promoting Omnipod dash for type two this year and you can see the results already so if you saw a quarter over quarter dash actually did really well in the quarter.
You had a little bit better than last quarter in terms of percent of percent of revenue and thats clearly because as we're out talking to physicians about type two patients.
Pump therapy.
We're driving growth in type two.
We also know even though we cannot promote omnipod five because it does not yet have an indication for use we do know that AIB for people with type two and it's specifically omnipod five AIG for people with type two is very high appeal and physicians are writing it off label, even though we're not promoting it and so when you take those two things together.
The success of Omnipod dash in the type two market.
The obvious pent up demand for only about 5% of the type two market once we get the indication for use with the successful results from the secure trial, we think unlock massive growth for us that will come in the endocrinology channel.
We also think type two growth can come out of the PCP channel, which is why we've.
Piloting on me if I go in the PCP channel because it extends our reach upstream for type two patients as they initiate insulin therapy with a basal offering and then as they progressed they will already be on an omnipod offering and they should pretty seamlessly progress onto either omnipod dash omnipod five.
Our next question comes from Steven Lichtman from Oppenheimer. Please go ahead. Your line is open.
Thank you Ethan guys.
So you mentioned earlier you are clearly moving your.
Prescriber base past high volume Anders.
Do you need to expand your sort of your feet on the street meaningfully as this prescriber base continues to grow or where you're seeing leverage opportunities from your current team.
Great question, Steve and I would say two things on that front in the first one is we are considering expanding feet on the street and that's part of the Omnipod go.
Commercial pilot to figure out how many feet on the street, we need to get the reach that we want.
The other thing is we get a lot of leverage out of DCP.
So a lot of a lot of the physicians that are writing for us don't necessarily have a rep, calling on them right now and whats happening is our DTP advertising often reaches physicians by the way so they often see the product through through our online media or maybe on the TV ads, but patients go in and ask for Omnipod into those practices.
We don't necessarily have a call routine with so we're getting leverage in that way already.
And then we will consider adding feet feed on the street as you say.
As appropriate over the over the coming quarters.
Our next question comes from Chris Pasquale from Nephron. Please go ahead. Your line is open.
Thanks, I just wanted to follow up on the Oh five type two opportunity how are you thinking about the timeline for FDA approval and then also for presentation of that data because it sounds like there's also already a fair amount of off label interest.
And it would seem like perhaps the data presentation itself could be a catalyst to spur even more interest before you actually get the labeling.
Great questions, Chris first on timing, we haven't announced a formal timeline on getting to an FDA clearance out of the secure trial, but it's fairly easy to do the math and the last patient will probably be in.
No later than the end of the calendar year 2014 week protocol analyzed data do a filing so I think it's safe to.
Is it safe to say that we'll be filing with the FDA in 'twenty four for sure for clearance and then we'll see we'll see what happens in terms of in each of those steps.
Plus or minus on the timeline on them.
We expect to file next year for that in.
In between now and then there's a couple of things that are in terms of data on the study we have published data out of our.
Type two feasibility trial.
As we've referred to that in the context of the <unk> one.
News that that what we do see an out of our feasibility data as the patients in that smallest trial, who were also on GOP ones actually did better on omnipod five in patients not on GOP ones and for reasons that we explained in the slides that we posted last quarter and that we've updated this week.
And so <unk> want to make the body more sensitive to insulin.
And they reduced the required dose and so the combination of the two actually ends up with a better outcome for patients, which is interesting and along those lines. We anticipate that we will have a large number just about half plus or minus of the current enrollees in that trial are already on either <unk> <unk> or <unk> one.
And so we anticipate being able to report out on subsets of the trial that may happen may happen before the FDA filing may happen after but we anticipate being able to do some kind of scientific reporting on that as well during 2024.
Our next question comes from Marie Thibault from BTG. Please go ahead. Your line is open.
Thanks for squeezing me in congrats on the iOS clearance just a quick one here on that one might we see the G. Seven omnipod five integrated with iOS as well just all of the latest generation. Thanks.
We haven't guided the timing on that Murray you can imagine that that's a very urgent matter for us to get to.
But we'll do first things first is so well get into LMR with iOS, which would be a <unk> offering initially and we'll get into <unk> seven.
And then the two systems will come together after that.
Our next question comes from Josh Jennings from TD Cowen. Please go ahead. Your line is open.
Hi, good afternoon, congratulations on another strong quarter wanted to follow up on Steve's question on the expanding prescriber base.
Any chance you can help us think through penetration in the tune of seven to 8000 endocrinologists and then of the additional prescribers I guess, if you're almost fully penetrated there.
To 9000 are those some of those nurse practitioners and endocrinology practices or the PCP, maybe just help us better understand.
Where where youre getting this prescriber expansion outside of the chronology. Thanks a lot.
Thanks, Josh.
Provided we don't have perfect data on the specifics of your question, but.
Well penetrated with endocrinologists, we know that some of those prescribers are nurse practitioners and other carriage centers and endo practices and then we know that some of the writers are pcp's or a P is attached to non specialist practices as well.
But I don't think I mean, I'll turn it to Loren Andrew Deb to see if we have other color than that.
The color I think we have.
Now this is that that's the color that we have Jim it's great because what we're seeing is we're seeing increases from all aspects youre seeing increasing prescribers from endo is increasing prescribers from ACP and it's right that we also have a PCP that are becoming aware of the system and prescribing. It. So we look at that.
Trend data and we see it increasing over the last quarter and it's been great. So, we'll see where it goes from there.
Our next question comes from Danielle <unk> from UBS. Please go ahead. Your line is open.
And everyone. Thank you so much for taking my question and congrats on a really strong quarter.
My last question is the question.
A lot and thats around the primary care physician population here and just sort of what influenced doing sure that they're appropriately servicing that debt.
<unk> prescribing base because they.
Thank you on the majority of that type two so really executing upon that once you do get the Omnipod Si type two indication and it doesn't require you to add to the sales force or do you think you have enough to get to all of the high prescribing physician. Thanks, so much.
Okay.
Thanks Danielle.
Primary care physicians are really important in the type two patient journey absolutely.
A couple of things that we're doing there one is.
That's our main it's one of the main objectives of our Omnipod go commercial pilot.
We really want to understand better than we do right now kind of in person what's going on in the primary care channel and so the Omnipod go commercial pilot has allowed us to get into a number of primary practices.
Is that a target patient population of them, which which we're finding as ringing true for them for the go offering and as I said as I said earlier.
It's really allowing us to see that.
Primary practices don't know much often about our portfolio of products and once we get in there. They are very interested in our bulk portfolio, including Omnipod dash in and of course, we're not indicated from me by five so we're not promoting it there.
But it is giving us opportunity to talk about the whole portfolio.
Out of the pilot will develop a better approach refined approach for how we commercialize into primary care and there are several other options. The other thing that that we see is that our.
Our DTP advertising, sorry, direct to patient direct to consumer type advertising and our social media does tend to reach into the primary channel. So physicians, often see that media and patients often see the medium walk into their position and ask about it. So we're getting leverage in that way as well and I agree with you we need to to really service type two patients we need to.
We need to find them, where they are in very often where they are is in the primary channel.
Our last question today will come from Matt Mcclintock from Barclays. Please go ahead. Your line is open.
Great. Thanks, so much for fitting me in.
So maybe just.
You could.
The sort of the thinking of entering the basal market potentially.
On the other side of this just.
Give us a sense of your your expectations. There in terms of is this sort of attaching with relationships with patients potentially as they move into a more insulin intensive.
Clinical needs or is this a portion of that market that you feel.
Speaking beyond the sort of out of pocket.
The interest that you've seen so far but is there a portion of that market that you think is particularly attractive and maybe the size around that just sort of update on your view as well.
What is that opportunity. In addition of course being very large compared to the to the insulin intensive opportunity. Thanks.
Yes, Thanks, Matt there are at least $3 million.
Patients in the U S who are on basal only therapy. Some people say four so let's call. It three to 4 million people on basal only insulin therapy.
Who have type two diabetes in the U S really only a small penetration in that market.
Helps meaningfully with our growth trajectory because our aim is to not only serve those patients but.
To introduce Omnipod family of products to them such that when their disease progresses, which is essentially inevitable as their disease progresses.
We have a relationship with them, we're helping with the therapy early and then we stay they stay with US we stay down.
Their disease progresses.
Target patient population there is theres a lot of people there and theres a lot of offerings in there there's people on MDI.
We've been asked before and we're conscious of the fact that the insulin companies are looking to launch once a week into loans, which will be a type of therapy in that market. We think there is a lot of room in that market for different offerings and for us.
There are some clear benefits that we bring to market with Omnipod go which include Theres no needles. So there is a very significant percentage of patients don't.
Don't want to do an injectable therapy, because they don't like needles.
And then the other thing is people forget to take their care they forget to take their insulin.
And so we think that we saw both of those problems for both patients and their physicians and that's what we're testing out in our commercial pilot so.
So we think there is a meaningful market there for us for Omnipod go with basal only therapy and importantly, we think when we get to those patients and help them early in their in their <unk>.
<unk> journey.
We can help them throughout their patient journey and eventually many of them will end up on Omnipod Dash Omnipod, 5%. So that's the theory of the case, it's both and it's a it's a meaningful market for us as a basal market and its and its early customer acquisition. If you think about it that way early in the patient lifecycle, which helps us to acquire those patients much further upstream.
I'm showing no further questions at this time I would like to turn the conference back to Jim <unk> for closing remarks.
Thank you everybody for joining us today, we're really excited to have delivered another outstanding quarter.
For Insulet with with our Omnipod family of products.
Clearly driving growth and have great momentum in the type one market both in the U S and now excited internationally as we've launched Omnipod five in the UK and Germany and are on track to deliver it in other international markets clearly leading the market in type two which is a very exciting development for us I want to thank all of our insulet employees for their dedication and for <unk>.
Their focus on mission because it has helped us to get out and continued to reach all the people out there that we've reached helping them simplify their lives with diabetes or millions of people around the world that we intend to help.
We're well on track to do that thanks, everybody for joining us today and have a good evening.
Ladies and gentlemen. This concludes today's conference. Thank you for parts of your participation and have a wonderful day you may all disconnect.
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