Q4 2023 Insulet Corp Earnings Call
Operator: Good afternoon, ladies and gentlemen, and welcome to the Insulet Corp. 4th Quarter 2023 earnings call. At this time, all participants are in a listen-only mode.
Good afternoon, ladies and gentlemen, and welcome to the Insulet Corporation fourth 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.
Operator: 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.
<unk> on your Touchtone telephone as a reminder, this conference call is being recorded.
Nobody could turn the conference over to your host Deborah Gordon Vice President Investor Relations.
Deborah R. Gordon: Good afternoon, and thank you for joining us for Insulet's fourth quarter and full year 2023 earnings call. With me today are Jim Hollingshead, President and Chief Executive Officer, and Lauren Budden, our Interim Chief Financial Officer and Treasurer. Both the replay of this call and the press release discussing our 2023 results and 2024 guidance will be available on the investor relations section of our website. Also on our website is our fourth quarter supplemental earnings presentation. We encourage you to reference that document for a summary of key metrics and business updates. Before we begin, we remind 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.
Deborah R. Gordon: Thank you good afternoon, and thank you for joining us for Insulet is fourth quarter and full year 2023 earnings call with me today are Jim Hollingshead, President and Chief Executive Officer, and Lauren Button, our interim Chief Financial Officer, and Treasurer, both a replay of this call and the press release discussing our 2023.
Deborah Gordon: Our results in 2024 guidance will be available on the Investor Relations section of our website also on our website as our fourth quarter supplemental earnings presentation. We encourage you to reference that document for a summary of key metrics and business updates.
Deborah Gordon: Before we begin we remind you that certain statements made by Insulet. During the course of this call may be forward looking and could materially differ from current expectations.
Deborah Gordon: Refer to the cautionary statements in our SEC filings for a detailed explanation of the inherent limitations of such statements.
Deborah R. Gordon: We'll also discuss non-GAAP financial measures with respect to our performance, namely adjusted growth in operating margins, adjusted EBITDA, and constant currency revenue, which is revenue growth excluding the effects of foreign exchange. These measures align with what management uses as supplemental measures in assessing our operating performance, and we believe they are 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 basis, with the exception of revenue growth rates, which will be on a year-over-year constant currency basis. With that, I'll turn the call over to Jim.
Deborah Gordon: Well also discuss non-GAAP financial measures with respect to our performance, namely adjusted growth and operating margin adjusted EBITDA and constant currency revenue, which is revenue growth excluding the effect of foreign exchange.
Deborah Gordon: This measure was 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.
Deborah Gordon: Digitally 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.
James Hollingshead: Thanks, Deb. Good afternoon, and thank you for joining us. With our strong Q4 2023 results, we capped off another transformational year in which we firmly established Insulet as the market leader in automated insulin delivery. In 2023, we realized 30% revenue growth, which marked our eighth consecutive year of 20 plus percent revenue growth and represented dollar growth of almost $400 million. We accomplished this while also significantly expanding margins and generating positive free cash.
James Hollingshead: Thanks, Jeff Good afternoon, and thank you for joining us.
James Hollingshead: With our strong Q4 2023 results, we capped off another transformational year, and which we firmly establish insulet is the market leader in automated insulin delivery.
In 2023, we realized 30% revenue growth, which marked our eighth consecutive year of 20 plus percent revenue growth and represented dollar growth of almost $400 million.
We accomplished this while also significantly expanding margins and generating positive free cash flow.
James Hollingshead: Our record new customer starts in 2023 fueled our global growth, and our Omnipod 5 AID system, which generated $1 billion in revenue in 2023, is transforming diabetes management. We entered 2024 with significant momentum, and we are looking forward to a year of many growth catalysts ahead. On today's call, I want to do three things.
James Hollingshead: Our record new customer starts in 2023, fueled our global growth and our Omnipod five AIB system, which generated $1 billion in revenue in 2023 is transforming diabetes management.
James Hollingshead: We entered 2024 with significant momentum and we're looking forward to a year of many growth catalysts ahead.
Speaker Change: On today's call I want to do three things first discuss our financial results and market traction.
James Hollingshead: First, I'll discuss our financial results and market traction. Next, I'll provide an update on the continuing progress of our clinical efforts and then review key developments in our innovation pipeline. Our fourth quarter revenue once again exceeded our expectations with total Omnipod growth of 35 percent, including U.S. growth of 43 percent. Part of our outperformance was driven by U.S. distributors placing additional orders near the end of the quarter, which we had not factored into our guidance.
Speaker Change: Next I'll provide an update on the continuing progress of our clinical efforts.
Speaker Change: Then review key developments in our innovation pipeline.
Speaker Change: Our fourth quarter revenue once again exceeded our expectations with total omnipod growth of 35%, including U S growth of 43%.
Speaker Change: Part of our outperformance was driven by U S distributors, placing additional orders near the end of the quarter, which we had not factored into our guidance.
James Hollingshead: We'll provide more detail on this in a few minutes. Yet even without these additional orders, we closed out 2023 ahead of our expectations, including healthy margin expansion. These are remarkable results, and I want to thank our global team for their execution and dedication. We are proud of the incredible impact the Omnipod product platform is having on people with diabetes. We recently achieved milestones of roughly 425,000 active global customers on the Omnipod platform, which represents growth of approximately 25 percent from this time last year. This also includes almost 250,000 customers on Omnipod 5, which has proven to be revolutionary. And Omnipod Dash continues to drive strong new customer starts in our U.S. Type 2 diabetes market, as well as in most of our international markets. We are thrilled that our unique technology is making a meaningful impact in the diabetes community, advancing our mission to improve the lives of people with diabetes around the world. OmniPod 5 is the only FDA-cleared, fully-disposable, pod-based AID system.
Speaker Change: We will provide more detail on this in a few minutes.
Speaker Change: Yet even without these additional orders we closed out 2023 ahead of our expectations, including healthy margin expansion.
Speaker Change: These are remarkable results and I want to thank our global team for their execution and dedication.
We are proud of the incredible impact the Omnipod product platform is having on people with diabetes.
Speaker Change: We recently achieved milestones of roughly 425000 active global customers on the Omnipod platform, which represents growth of approximately 25% from this time last year.
Speaker Change: This also includes almost 250000 customers on Omnipod files, which is proven to be revolutionary.
Speaker Change: And Omnipod Dash continues to drive strong new customer starts in our U S type two diabetes market as well as in most of our international markets.
Speaker Change: We are thrilled that our unique technology is making a meaningful impact in the diabetes community advancing our mission to improve the lives of people with diabetes around the world.
Omnipod five is the only FDA cleared fully disposable pod based AI system.
James Hollingshead: This makes our product unique and clearly differentiated from competitors' offers. These product attributes underpin our competitive advantages and are key to fueling our growth, further establishing our leadership position and expertise in the diabetes market. The fully on-body, wearable AIDA experience of Omnipod 5 dramatically reduces the daily burden of living with diabetes. And its simplicity, ease of use, and broad and affordable access are also key drivers of its rapid adoption.
Speaker Change: This makes our product unique and clearly differentiated from competitors offers.
Speaker Change: These product attributes underpin our competitive advantages in our key to fueling our growth further establishing our leadership position and expertise in the diabetes market.
Speaker Change: The fully on body wearable AIG experience of Omnipod five dramatically reduces the daily burden of living with diabetes.
Speaker Change: And its simplicity ease of use and broad and affordable access are also key drivers of its rapid adoption.
James Hollingshead: For almost ten years, we have significantly invested in U.S. pharmacy channel access, including building the infrastructure, developing key pharmacy relationships, creating an easy onboarding pathway, and building deep in-house expertise, all of which has resulted in the strong and leading channel access we have today. We continue to strengthen Omnipod's access and affordability, including our innovation pipeline that will go through this channel by building on our advantages. In the U.S., Omnipod 5 continued to represent the vast majority of our new customer starts in Q4, and we expect this trend to continue. In addition, customer retention remains strong.
Speaker Change: For almost a decade, we have significantly invested in U S pharmacy channel access, including building the infrastructure developing key pharmacy relationships, creating an easy onboarding pathway and building deep in house expertise all of which has resulted in a strong and leading channel access we have today.
Speaker Change: We continue to strengthen omnipod access and affordability, including our innovation pipeline that will go through this channel by building on our advantages.
Speaker Change: In the U S. Omnipod five continue to represent the vast majority of our new customer starts in Q4, and we expect this trend to continue in addition customer retention remains strong.
James Hollingshead: The mix of U.S. new customer starts coming from multiple daily injections and legacy tube pumps continued at an estimated 80-20 percentage split. Today, even with improved technology, most people using insulin still use MDI as their mode of care. More than 60% of people with type 1 diabetes in the U.S. are on MDI, and the vast majority of people with type 2 diabetes are using daily injections.
Speaker Change: The mix of U S. New customer starts coming from multiple daily injections and legacy tube pumps continued at an estimated 80 20 percentage split.
Speaker Change: Today, even with improved technology, most people using insulin still use MDI as their motive care.
Speaker Change: More than 60% of people with type one diabetes in the U S are on MDI and the vast majority of people with type two diabetes are using daily injections.
James Hollingshead: Therefore, bringing people out of MDI and onto Omnipod remains the largest opportunity for us, and we continue to drive pump penetration and share gain in both the Type 1 and Type 2 markets, strengthening our leadership position. Omnipod 5 not only drove our number one position for US new customer starts in 2023, but it was the most prescribed AIB system in the US. This is because a growing number of health care providers are writing prescriptions for it.
Speaker Change: Therefore, bringing people out of MDI and onto Omnipod remains the largest opportunity for us and we continue to drive pump penetration and share gain in both the type one and type two markets strengthening our leadership position.
Speaker Change: Omnipod five not only drove our number one position for U S. New customer starts in 2023. It was the most prescribed aib's system in the U S.
Speaker Change: This is because a growing number of health care providers are writing scripts for it.
James Hollingshead: In Q4, we saw another increase in prescribers, growing to over 18,500, up from 17,000 in Q3. We speak with many HCPs, and it is clear that Omnipod 5 is the winning choice for AIB. It is extremely gratifying to see the growing demand, confidence, and adoption, which have led to a growing number of scripts, and HCPs now right for our system. Our strong new customer starts included continuing adoption of Omnipod in the U.S. The type 2 diabetes market. We estimate that no more than 5% of people with type 2 diabetes who need intensive insulin therapy are currently using any kind of therapy.
Speaker Change: In Q4, we saw another increase in prescribers growing to over 18500 up from 17000 in Q3.
Speaker Change: We speak with many Hcp's and it is clear that Omnipod five is the winning choice for AIB.
Speaker Change: It is extremely gratifying to see the growing demand confidence and adoption, which have led to a growing number of scripts hcp's now right for our system.
Speaker Change: Our strong new customer starts included continuing adoption of Omnipod in the U S type two diabetes market.
Speaker Change: We estimate that no more than 5% of people with type two diabetes, who need intensive insulin therapy are currently using any kinds of pumps and.
James Hollingshead: And we know that we are already the market leader in that space. We are confident that Omnipod will prove to be a simple and compelling solution for the millions of people globally with type 2 diabetes who today need insulin therapy as a part of their diabetes care regimen, as well as the future millions who will naturally progress to requiring insulin as a part of their care. We are well positioned to bring all of the benefits of the Omnipod platform to people with type 2 diabetes both today and in the future. In the fourth quarter, type 2 diabetes patients represented between 20 and 25 percent of our U.S. new customer starts across our Omnipod suite of products. While Omnipod Dash, with its Type 2 indication for use, is the leading insulin pump offering in this market, we look forward to marketing Omnipod 5 to Type 2 patients once we have an expanded indication.
Speaker Change: And we know that we are already the market leader in that space.
Speaker Change: We are confident that omnipod will prove to be a simple and compelling solution for the millions of people globally with type two diabetes, who today need insulin therapy as a part of their diabetes care regimen.
Speaker Change: As well as the future of millions, who will naturally progressed, requiring insulin as a part of their care.
Speaker Change: We are well positioned to bring all of the benefits of the Omnipod platform with people with type two diabetes, both today and in the future.
Speaker Change: In the fourth quarter type two diabetes patients represented between 20 and 25% of our U S. New customer starts across our Omnipod suite of products.
Speaker Change: While omnipod dash with its type two indication for us as the leading insulin pump of operating in this market. We look forward to marketing Omnipod five to type two patients once we have an expanded indication.
James Hollingshead: The underlying demand is apparent. We expect the last participant to complete our type 2 pivotal trial in the coming weeks, and we plan to submit results to the FDA by the end of 2024 for an expanded indication. We are confident this will be another catalyst that will fuel our growth trajectory, allow us to serve more patients, and help us deliver on our mission. We look forward to sharing study results at ADA this June. The success of Omnipod 5, including its early yet powerful impact in two of our European markets, led to another strong quarter of new customer starts globally. Internationally, we see a notable sequential increase in new customer starts driven by the impact Omnipod 5 is having in the UK and Germany.
Speaker Change: The underlying demand is apparent.
Speaker Change: We expect the last participant to complete our type two pivotal trial in the coming weeks and we plan to submit results to the FDA by the end of 2024 foreign expanded indications.
Speaker Change: We are confident this will be another catalyst that will fuel our growth trajectory allow us to serve more patients and help us deliver on our mission. We look forward to sharing study results at Ada This June.
Speaker Change: The success of Omnipod five including its early yet powerful impact in two of our European markets led to another strong quarter of new customer starts globally.
Speaker Change: Internationally, we realized a notable sequential increase in new customer starts driven by the impact Omnipod five is having in the UK and Germany.
James Hollingshead: Our early success in these countries supports our confidence that Omnipod 5 will continue to transform diabetes care and position us as a market leader everywhere Omnipod 5 is available. We remain on track with our Omnipod 5 plus G6 European launch plans with the aim of making Omnipod 5 accessible to the majority of our European customers by the end of 2024. We are also thrilled to begin our journey launching Omnipod 5, integrated with Avid's Freestyle Libre 2 Plus. I'll speak to this new opportunity in a moment.
Speaker Change: Our early success in these countries supports our confidence that it will continue to transform diabetes care and position us as a market leader everywhere Omnipod five is available.
Speaker Change: We remain on track with our Omnipod five plus <unk> European launch plans with the aim of making Omnipod five accessible to the majority of our European customers by the end of 2024.
Speaker Change: We are also thrilled to begin our journey launching omnipod five integrated with Abbott freestyle Libre, two plus sensors.
Speaker Change: I'll speak to this new opportunity in a moment.
James Hollingshead: In addition to our Type 2 Pivotal Study progress, we are meaningfully advancing several other clinical initiatives. We are excited to attend the ATTB International Conference in Italy in a couple of weeks, where we will present data for the Omnipod 5 plus G6 randomized controlled trial. This RCT compared Omnipod 5 to non-AID pumps and included study sites in the U.S. and France.
Speaker Change: In addition to our type two pivotal study progress we're meaningfully advancing several other clinical initiatives.
Speaker Change: We are excited to attend the HGTV International conference in Italy, and a couple of weeks, where we will present data for the Omnipod five plus G. Six randomized controlled trial.
Speaker Change: This RCT compared Omnipod five to non AIB pump and included study sites in the U S and France.
James Hollingshead: We are thrilled to have recently published in the Diabetes Technology and Therapeutics Journal real-world evidence from almost 70,000 people with type 1 diabetes demonstrating Omnipod 5's effectiveness in a large, diverse population. The data are impressive and demonstrate the strength of the Omnipod 5 algorithm in the real world, delivering leading time and range and very low hypoglycemia, reinforcing Omnipod 5 as the obvious choice for clinical outcomes and personalized diabetes. Central to everything we do is our mission to simplify life for people with diabetes. We want to make it easier for people to get prescribed therapy, get set up on therapy, and use therapy consistently over time. This is the point of our Evolution Feasibility Study taking place in New Zealand.
Speaker Change: We are thrilled to have recently published in diabetes technology, and Therapeutics Journal real World evidence from almost 70000 people with type one diabetes, demonstrating omnipod fives effectiveness and a large diverse population.
Speaker Change: The data are impressive and demonstrates the strength of the Omnipod five algorithm in the real world delivering leading time and range and very low hypoglycemia reinforcing omnipod five as the obvious choice for clinical outcomes and personalize the diabetes care.
Speaker Change: Central to everything we do is our mission to simplify life for people with diabetes, we want to make it easier for people to get prescribed therapy get set up on therapy and use therapy consistently over time.
Speaker Change: This is the point of our evolution feasibility study taking place in New Zealand. Our intent is to have a next generation algorithm that will further drive simplicity of use.
Speaker Change: We completed the first feasibility study in participants with either type one or type two diabetes commencing initially and supervised hotel setting and then progressing to Apple news.
James Hollingshead: Our intent is to have a next-generation algorithm that will further drive simplicity of use. We completed the first feasibility study in participants with either type 1 or type 2 diabetes, commencing initially in supervised hotel settings and then progressing to at-home use. We are pleased with the preliminary results and are analyzing the data and making modifications for the next round of subjects. We will present early feasibility results at ATTD. Lastly, we continue to actively enroll participants in our RADIANT study in France, the UK, and Belgium, which is our Libre2 integration trial. We began enrollment in September 2023, which is now halfway complete.
Speaker Change: We are pleased with the preliminary results and are analyzing the data and making modifications for the next round of subjects.
Speaker Change: We will present early feasibility results at ATV.
Speaker Change: Lastly, we continued to actively enroll participants in our radiant study in France, the UK and Belgium, which is our libre two integrations trial.
Speaker Change: We began enrollment in September 2023, which is now halfway complete.
Speaker Change: Feedback has been tremendous and physicians new to Omnipod five appreciate its simplicity and potential to reach many more pump naive users.
Speaker Change: As a reminder, both our <unk> and Libre II studies are designed to provide the evidence we need to elevate omnipod five status.
James Hollingshead: Feedback has been tremendous, and physicians new to Omnipod 5 appreciate its simplicity and potential to reach many more pump-naive users. As a reminder, both our G6 and Libre2 studies are designed to provide the evidence we need to elevate Omnipot5's status as a superior first-line therapy and help drive our pricing and market access initiatives as we further roll out OmniPOD 5 with multiple sensors across our international markets. I'll now provide an update on our innovation progress, and we'll focus on three key areas, expanding the Omnipod Pi platform, moving upstream in the Type 2 market with Omnipod Go, and building our digital and data capability. Many of you have heard us say that our current Omnipod 5 system is our quote, minimum viable product. That's easy to forget given how quickly the market has adopted Omni 5.5 and made it the leading offer. However, our current version is on only one operating system, Android.
Speaker Change: For your first line therapy.
Speaker Change: And helped drive our pricing and market access initiatives as we further rollout omnipod five with multiple sensors.
Speaker Change: Across our international markets.
Speaker Change: I'll now provide an update on our innovation progress and we will focus on three key areas expanding the omnipod platform moving upstream in the type two market with Omnipod go and building, our digital and data capabilities.
Speaker Change: Many of you have heard us say that our current Omnipod five system is our quote minimum viable product.
Speaker Change: Easy to forget given how quickly the market has adopted omnipod five and made it the leading offer.
Speaker Change: Our current version is on only one operating system Android It is integrated with only one continuous glucose monitoring partner decks com and until recently was commercialized with only <unk> six and it contains our first generation algorithm.
This is about the change with platform extensions that will strengthen our leadership deepen our competitive moats and allow us to open up omnipod five to many more customers.
Speaker Change: To start we are excited to have commenced our U S limited market release of Omnipod five with G. Seven over the last two weeks.
James Hollingshead: It is integrated with only one continuous glucose monitoring partner, Dexcom, and until recently, it was commercialized with only G6. And it contains our first generation algorithm. This is about to change with platform extensions that will strengthen our leadership, deepen our competitive moats, and allow us to open up Omnipod 5 to many more customers. To start, we are excited to have commenced our U.S. limited market release of Omnipod 5 with G7 in the last two weeks. This initial release will allow us time to test the market and build the product at scale to prepare for what we are confident will be a very successful full market release of G7 this year.
Speaker Change: This initial release will allow us time to test the market and build product at scale to prepare for what we are confident will be a very successful full market release of <unk> seven this year.
Speaker Change: We anticipate an acceleration in new customer starts following a full launch which will help to fuel our revenue growth more meaningfully in 2025 and beyond.
Speaker Change: We are also on track with our planned limited market release of Omnipod five with Libre two plus in the first half of this year in the Netherlands, and UK made possible by the CE Mark approval, we received earlier this month.
Speaker Change: We are excited that the option for customers to use omnipod five with both <unk> six and Libre, two plus will enable us to reach many more patients.
James Hollingshead: We anticipate an acceleration in new customer starts following a full launch, which will help to fuel our revenue growth more meaningfully in 2025 and beyond. We are also on track with our planned limited-market release of Omnipod 5 with Libre 2 Plus in the first half of this year in the Netherlands and UK, made possible by the CE mark approval we received earlier this month. We are excited that the option for customers to use Omnipod 5 with both G6 and Libre 2 Plus will enable us to reach many more patients.
Speaker Change: Our recent and upcoming CGM integrations are important milestones and providing choice to tens of thousands of customers who want to use omnipod five.
Speaker Change: And we believe both integrations will be significant catalyst for our growth in 2024 and beyond.
Speaker Change: Rounding out near term innovation, we are planning for our U S launch of Omnipod five with the <unk> system with our iOS App this year.
Speaker Change: This will mark a major innovation milestone because so many of our U S customers use Apple iPhone and prefer to carry only one phone.
James Hollingshead: Our recent and upcoming CGM integrations are important milestones in providing choice to tens of thousands of customers who want to use Omnipod 5. And we believe both integrations will be significant catalysts for our growth in 2024 and beyond. Rounding out near-term innovation, we are planning for our U.S. launch of Omnipod 5 with the G6 system and our iOS app this year. This will mark a major innovation milestone because so many of our U.S. customers use Apple iPhones and prefer to carry only one phone. Another innovation that will allow us to reach more people and further expand our total addressable market is Omnibug Go, a solution designed for individuals with type 2 who naturally progress to requiring basal-only insulin and want a simple way to receive their daily dose while avoiding the burden of injection. Our commercial pilot is underway, and it will help us refine our commercialization plan. Omnipod Dash has already made Insulet the leader in insulin delivery for people with type 2 diabetes.
Speaker Change: Another innovation that will allow us to reach more people and further expand our total addressable market is on the if I go a solution designed for individuals with type two naturally progressed, requiring basal only insulin and want a simple way to receive their daily dose, while avoiding the burden of injections.
Speaker Change: Our commercial pilot is underway and it will help us refine our commercialization plans.
Speaker Change: Omnipod Dash is already maintenance was the leader of insulin delivery for people with type two diabetes and with army. If I go we are well positioned to move upstream in the patient care pathway.
Speaker Change: When we achieve clearance for Omnipod five in the type two market, we will bring all of the advantages of our AIB system to this market.
Speaker Change: With these three products. Our aim is to deliver on omnipod portfolio that meets the full range of needs of people with type two who require insulin as a part of their care.
Speaker Change: We are excited about our innovation in this space and our ability to address the unmet needs that exist in this patient population. It is a massive global market that we expect will continue to grow and we have the clear lead to pursue this market opportunity.
Speaker Change: We are also excited to build on our digital and data capabilities.
Speaker Change: One of the breakthrough features of Omnipod five as the real time data provided by Sim cards in every controller.
James Hollingshead: And with Omnipod Go, we are well positioned to move upstream in the patient care pathway. When we achieve clearance for Omnipod 5 in the Type 2 market, we will bring all of the advantages of our AID system to this market. With these three products, our aim is to deliver an Omnipod portfolio that meets the full range of needs of people with type 2 who require insulin as part of their care.
Speaker Change: We constantly hear from physicians and patients how much. They appreciate not needing to plug in for real time usage data and 100% cloud connectivity has already given us the opportunity to publish the largest real world data set on AIG.
Speaker Change: Over time, we plan to use the data to speed up product development further improve the user experience streamline physician workflows.
Speaker Change: And build on our competitive advantages.
Speaker Change: We also continue building digital and data driven products to simplify diabetes management for both customers and caregivers.
James Hollingshead: We are excited about our innovation in this space and our ability to address the unmet needs that exist in this patient population. It is a massive global market that we expect will continue to grow, and we have the clear lead to pursue this market opportunity. We are also excited to build on our digital and data capabilities. One of the breakthrough features of Omnipod 5 is the real-time data provided by SIM cards in every controller. We constantly hear from physicians and patients how much they appreciate not needing to plug in for real-time usage data.
Speaker Change: In closing Insulet continues to set the standard for the industry with a strong 2023 behind us we see multiple catalysts in the coming year and beyond.
Speaker Change: We are confident we will drive significant growth and continued success.
Speaker Change: I want to thank our Insulet global team for your dedication and deep passion for our customers and your commitment to delivering innovation.
Speaker Change: You are the reason for our success and our ability to continue to drive our mission to simplify life for the millions of people with diabetes around the world.
Speaker Change: With that I will turn the call over to Lauren.
Lauren Button: Thanks, Jan 2023 was another exciting year for Insulet in the fourth quarter was no exception, we have strong momentum with many catalysts that will drive revenue growth and margin expansion in 2024 and over the long term.
James Hollingshead: And 100% cloud connectivity has already given us the opportunity to publish the largest real-world data set on AID. Over time, we plan to use the data to speed up product development, further improve the user experience, streamline position workflows, and build on our competitive advantages. We will also continue building digital and data-driven products to simplify diabetes management for both customers and caregivers. In closing, Insulet continues to set the standard for the industry.
Lauren Button: Thank you for we generated strong global new customer starts fueled by the continued high demand for Omnipod five not only in the U S.
Lauren Button: Also in our first two European markets.
As a result of our growing customer base, we delivered 37% revenue growth in Q4, driven by global Omnipod growth of over 35%.
We benefited from a shift in order timing and an increase in days on hand at certain pharmacy distributors, which I'll speak to in a moment.
Lauren Budden: With a strong 2023 behind us, we see multiple catalysts in the coming year and beyond. We are confident we will drive significant growth and continued success. I want to thank our Insulet Global team for your dedication and deep passion for our customers and your commitment to delivering innovation. You are the reason for our success and our ability to continue to drive our mission to simplify life for millions of people with diabetes around the world. With that, I will turn the call over to Lauren. Thanks, Jim. 2023 was another exciting year for Insulet, and the fourth quarter was no exception.
Lauren Button: Without these benefits our results still exceeded the guidance ranges.
On a reported basis for total revenue foreign currency was a 130 basis point tailwind compared to Q4 of last year.
Lauren Button: U S. Omnipod revenue growth was 43%, which continues to be driven by our annuity based model and growing U S pharmacy volume.
Lauren Button: This includes an increasing volume contribution from Omnipod, five and the related premium for pods in the U S pharmacy.
Lauren Button: Pharmacy access continues to be a benefit for the many reasons Jim spoke to.
Lauren Budden: We have strong momentum with many catalysts that will drive revenue growth and margin expansion in 2024 and over the long term. In Q4, we generated strong global new customer starts, fueled by continued high demand for Omnipod 5, not only in the U.S. but also in our first two European markets. As a result of our growing customer base, we delivered 37% revenue growth in Q4, driven by global Omnipod growth of over 35%. Additionally, we benefited from a shift in order timing and an increase in days on hand at certain pharmacy distributors, which I'll speak to in a moment. Without these benefits, our results still exceeded these guided frameworks.
Lauren Button: Our efforts to drive increased volume through this channel have resulted in almost all of our U S volume going through the pharmacy channel.
Lauren Button: The recurring net volume benefit we recognized in Q4 from new customers, who received their starter kits and firstly fill orders was in line with our expectations and remain consistent with Q3 levels.
Lauren Button: We expect this trend to continue.
Lauren Button: Also as expected the same net volume benefit from existing customers converting to Omnipod side was immaterial.
Lauren Button: Majority had already previously converted.
Lauren Button: In Q4 U S revenue benefited from two dynamics not previously contemplated in our guidance.
Lauren Button: Our largest U S pharmacy wholesalers collectively placed an estimated 20 million to $25 million.
Lauren Budden: On a reported basis for total revenue, foreign currency was a 130 basis point tailwind compared to Q4 of last year. U.S. Omnipod revenue grew by 43%, which continues to be driven by our annuity-based model and growing U.S. pharmacy volume. This includes an increasing volume contribution from Omnipod 5 and the related premium for pods in the U.S. pharmacy channel. Pharmacy channel access continues to be a benefit for the many reasons Jim spoke about, and our efforts to drive increased volume through this channel have resulted in almost all of our U.S. volumes going through the pharmacy channel.
Lauren Button: And orders that were accelerated from the first quarter of 2024 in advance of our implementation of a new ERP system at the start of 2024.
Lauren Button: The second benefit was an increase in estimated channel inventory days on hand of approximately $10 million $15 million.
As pharmacy distributors returned to their normal levels.
Lauren Button: As a reminder, in the first half of 2023, we called out a reduction in inventory days on hand below normal levels.
Lauren Button: What this boils down to is approximately 30 million to $40 million in revenue in Q4 that we had not anticipated contributing approximately 12 points to our U S revenue growth.
Lauren Budden: The recurring net volume benefit we recognized in Q4 from new customers who received their starter kits and first refill orders was in line with our expectations and remained consistent with Q3 levels. We expect this trend to continue. Also, as expected, the same net volume benefit from existing customers converting to Omnipod 5 was immaterial since the vast majority had already previously converted. In Q4, U.S. revenue benefited from two dynamics not previously contemplated in our guidance. First, our largest U.S. pharmacy wholesalers collectively placed an estimated $20 million to $25 million in orders that were accelerated from the first quarter of 2024 in advance of our implementation of a new ERP system at the start of 2024. The second benefit was an increase in estimated channel inventory days on hand of approximately $10 million to $15 million as pharmacy distributors return to their normal level.
Lauren Button: We are proud of our fourth quarter U S performance, especially given the tougher comparison due to the Omnipod five full market release in August of 2022.
Lauren Button: Additionally, new customer starts in Q4 were slightly down from Q3 as expected as the market is moving from <unk> <unk> sur <unk> seven.
Lauren Button: We are excited to have launched our U S limited market release of Omnipod five with G. Seven and as Ken shared we expect new customer starts to accelerate throughout 2024, as we ramp our commercial efforts.
Lauren Button: Overall, our U S business and related revenue growth are very strong fueled by Omnipod five success and continued robust demand.
Lauren Button: International Omnipod revenue increased 12, 5%, which was above our expectations.
Growth was primarily driven by continued strong adoption of Omnipod dash.
Lauren Button: And to a smaller degree of benefit from our Omnipod five launches in the UK and Germany, both of which drove notable increases in new customer starts.
Lauren Button: On a reported basis foreign currency was a 550 basis point tailwind over the prior year, which was approximately 250 points favorable versus our guide.
Lauren Budden: As a reminder, in the first half of 2023, we called out a reduction in inventory days on hand below the normal level. What this boils down to is approximately $30 million to $40 million in revenue in Q4 that we had not anticipated, contributing approximately 12 points to our U.S. revenue growth. We are proud of our fourth quarter U.S. performance, especially given the tougher comparison due to the Omnipod 5's full market release in August of 2022. Additionally, new customer starts in Q4 were slightly down from Q3, as expected, as the market is moving from Dexcom's G6 sensor to G7. We are excited to have launched our limited market release of Omnipod 5 with G7.
Lauren Button: Thank you for our estimated global attrition and utilization trends remained stable.
Lauren Button: Drug delivery revenue was almost $9 million, representing a $5 $5 million increase which was above our guidance range due to timing.
Lauren Button: Gross margin was 79% up over 200 basis points excluding.
Lauren Button: Excluding the impact of the 2022 medical device corrections adjusted gross margin increased 620 basis points to 77% in Q4 of 2023.
Lauren Button: This exceeded our expectations due to favorable manufacturing costs and product mix.
Lauren Button: The increase in adjusted gross margin was primarily driven by improved manufacturing efficiencies and favorable mix that included a premium from volume growth in the pharmacy channel.
Lauren Budden: And, as Jim shared, we expect new customer starts to accelerate throughout 2024 as we ramp our commercial effort. Overall, our U.S. business and related revenue growth are very strong, fueled by Omnipod 5's success and continued robust demand. International Omnipod revenue increased 12.5%, which was above our expectations. Growth was primarily driven by continued strong adoption of Omnipod Dash and, to a smaller degree, a benefit from our Omnipod 5 launches in the UK and Germany, both of which drove notable increases in new customer starts. On a reported basis, foreign currency was a 550 basis point tailwind over the prior year, which was approximately 250 points favorable versus our guide. In Q4, our estimated global attrition and utilization trends remained stable.
Lauren Button: Partially offsetting the favorable contributors were expected higher production costs as U S manufacturing continues to ramp and become a larger portion of our total production.
Lauren Button: Operating expenses increased in line with our expectations as we invested in our business to support our strong growth trajectory, including gearing up for near term product launches globally.
Lauren Button: Adjusted operating margin was 27% and adjusted EBITDA was 26, 9% of revenue.
Lauren Button: Both were above our expectations, primarily due to the 30 million to $40 million revenue benefit I mentioned, which have an estimated 360 basis point favorable impact on adjusted operating margin.
Lauren Button: To a lesser extent, both outperformed due to our higher than expected gross margin.
Lauren Button: Turning to cash and liquidity.
Lauren Button: We ended the year with over $700 million in cash and the full $300 million available under our credit facility.
At the end of January we successfully repriced our term loan b at a lower interest rate, which will reduce interest expense on an annualized basis by almost $2 million. We also achieved a milestone during the year of turning free cash flow positive generated an approximately $70 million in 2023.
Lauren Budden: Drug delivery revenue was almost $9 million, representing a $5.5 million increase, which was above our guidance range due to timing. Gross margin was 70.9%, up over 1,200 basis points. Excluding the impact of the 2022 medical device corrections, adjusted gross margin increased 620 basis points to 70.7% in Q4 2023. This exceeded our expectations due to favorable manufacturing costs and product. The increase in adjusted gross margin was primarily driven by improved manufacturing efficiencies and favorable mix that included a premium from volume growth in the pharmacy channel.
Lauren Button: We continue to strengthen our financial position, giving us the flexibility to invest throughout our organization to drive long term sustainable growth while at the same time, expanding our margins and generating positive free cash flow.
Lauren Button: Now turning to our 2020 for outlook.
Lauren Button: We continue to expect another year of large dollar growth, even with the significant volume benefits realized in 2023, most notably from our Omnipod five ramp.
Lauren Button: We expect to approach total company revenue of $2 billion at the high end of our guidance range.
Lauren Button: For the full year, we expect total omnipod revenue growth of 13% to 18% and total company revenue growth of 12% to 17%.
Lauren Budden: Partially offsetting the favorable contributors were expected higher production costs as U.S. manufacturing continues to ramp up and become a larger portion of our total production. Operating expenses increased in line with our expectations as we invested in our business to support our strong growth trajectory, including gearing up for near-term product launches globally. Adjusted operating margin was 20.7%, and adjusted EBITDA was 26.9% of revenue.
Lauren Button: As a reminder, our total company growth expectations exclude approximately three points due to the estimated 20 million to $25 million in orders that were accelerated into the fourth quarter of 2023.
For U S. Omnipod, we expect revenue growth of 16% to 21% driven by strong omnipod five adoption as well as recurring revenue from Omnipod dash and the benefits of our annuity model and pharmacy channel access.
Lauren Budden: Both were above our expectations, primarily due to the $30 million to $40 million revenue benefit I mentioned, which had an estimated 360 basis points favorable impact on adjusted operating margins. To a lesser extent, both outperformed due to our higher-than-expected growth margin. Turning to cash and liquid assets, we ended the year with over $700 million in cash and the full $300 million available under our credit facility. At the end of January, we successfully repriced our term loan B at a lower interest rate, which will reduce interest expense on an annualized basis by almost $2 million.
Lauren Button: As a reminder, we have a tougher comparison in 2024, resulting from the significant two scripts and retail channel net stocking volume benefits in 2023.
Lauren Button: In addition, our expectations exclude approximately four points of growth due to the estimated orders that shifted into 2023.
Lauren Button: When factoring this into both periods, our normalized expectation for 2024 at the high end of our range is in line with the color. We provided on our third quarter call of mid 20% growth.
Lauren Button: We anticipate new customer starts in the first half of 2024 to be slightly lower than the levels. We had in the second half of 2023 due to normal seasonality trends and we expect an acceleration in the second half of 2024 following a full market release of Omnipod five with G. Seven.
Lauren Budden: We also achieved the milestone during the year of turning free cash flow positive, generating approximately $70 million in 2020. We continue to strengthen our financial position, giving us the flexibility to invest throughout our organization to drive long-term, sustainable growth while at the same time expanding our margins and generating positive free cash flow. Now turning to our 2024 outlook, we continue to expect another year of large dollar growth, even with the significant volume benefits realized in 2023, most notably from our Omnipod 5 ramp. We expect to approach total company revenue of $2 billion at the high end of our guidance.
Lauren Button: Also as a reminder, estimated revenue from Omnipod side with our iOS App and from Omnipod go is expected to be immaterial.
Lauren Button: We also currently expect the cadence of our revenue growth to be weighted more towards the second half of 2024 due to the timing of new customer starts partially offset by the Q4 2023 stocking benefit.
Lauren Button: For International Omnipod, we expect revenue growth of 7% to 10%, which is in line with the 2024 color. We previously provided of high single digits.
Lauren Button: On a reported basis, we are assuming no foreign currency impact.
Lauren Button: We expect growth to be driven by ongoing omnipod dash adoption and from our recent omnipod five launches in the UK and Germany.
Lauren Budden: For the full year, we expect total Omnipod revenue growth of 13% to 18% and total company revenue growth of 12% to 17%. As a reminder, our total company growth expectations exclude approximately three points due to the estimated $20 million to $25 million in orders that were accelerated to the fourth quarter of 2023. For U.S. Omnipod, we expect revenue growth of 16% to 21%, driven by strong Omnipod 5 adoption, as well as recurring revenue from Omnipod Dash and the benefits of our annuity model and pharmacy channel access. As a reminder, we have a tougher comparison in 2024, resulting from the significant two-script and retail channel net stocking volume benefits in 2023. In addition, our expectations exclude approximately four points of growth due to the estimated orders that have shifted into 2023.
We expect continued headwinds in the countries, where we do not yet have omnipod five to partially offset this growth.
Lauren Button: We are excited to enter our first European markets in the first half of 2024 with Omnipod five integrated with Abbott freestyle Libre, two plus and to launch Omnipod five with the FX and another market around the same time.
Lauren Button: As a reminder, given the nature of our annuity model. We expect these launches to more meaningfully contribute to our growth rate in 2025.
Lauren Button: We continue to expect the first half of the year to be in the high single digits range and to accelerate in the second half of the year to a range of high single digits to low double digits, primarily due to a more meaningful contribution from our omnipod, five UK and Germany launches.
Lauren Button: To a lesser extent the additional launches in 2024.
Lauren Button: Lastly for drug delivery, we expect a 50% to 60% decline in line with the 2024 color. We previously provided.
Lauren Button: Turning to 2020 for gross margin, we expect a range of 68% to 69% and anticipated benefit from favorable product mix and manufacturing efficiencies.
Lauren Button: Partially offsetting this tailwind is our higher cost associated with our new product launches.
Lauren Budden: When factoring this into both periods, our normalized expectation for 2024 at the high end of our range is in line with the color we provided on our third quarter call of mid 20% growth. We anticipate new customer starts in the first half of 2024 to be slightly lower than the levels we had in the second half of 2023 due to normal seasonality trends. And we expect an acceleration in the second half of 2024 following a full market release of Omnipod 5 with G7. Also, as a reminder, estimated revenue from Omnipod 5 with our iOS app and from Omnipod Go is expected to be immaterial. We also currently expect the cadence of our revenue growth to be weighted more towards the second half of 2024 through the timing of new customer starts, partially offset by the Q4 2023 stocking benefit.
Lauren Button: We expect gross margin in the second half of the year to be higher than the first half due to accelerating revenue throughout the year and continued manufacturing efficiencies.
Lauren Button: And 2024, we plan to expand both gross and operating margins, while driving market growth.
Lauren Button: We expect operating expenses to increase as we invest in R&D and clinical and expand our sales force and other functions to support our commercial efforts and growth initiatives, including our near term product launches.
Lauren Button: Our sales force expansion includes hiring some reps specifically focused on pediatrics, a population for which Omnipod has always captured a large share.
Lauren Button: Even with increased investments, we have many opportunities to significantly expand margins and increase shareholder value and we remain committed to doing just that.
Lauren Button: We expect operating margin to be approximately 13% up approximately 100 basis points from 2023 adjusted operating margin.
Lauren Budden: For International Omnipod, we expect revenue growth of 7% to 10%, which is in line with the 2024 color we previously provided of high single digits. On a reported basis, we are assuming no foreign currency in the U.S. We expect growth to be driven by ongoing Omnipod Dash adoption and from our recent Omnipod 5 launches in the UK and Germany. We expect continued headwinds in the countries where we do not yet have Omnipod 5 to partially offset this. We are excited to enter our first European market in the first half of 2024 with Omnipod 5 integrated with Abbott's Freestyle Libre 2 Plus and to launch Omnipod 5 with G6 in another market around the same time.
Lauren Button: When factoring in the 130 basis point year over year unfavorable impact in 2024 from the $20 million to $25 million shift in order timing, we expect operating margins to be approximately 200 basis points higher in 2024 over 2023.
We expect operating margin to significantly improve in the second half of the year over the first half due to revenue ramping during the year and continued manufacturing improvements.
Lauren Button: We have many catalysts for growth in 2024 and considerable opportunities to drive further margin expansion over the near and long term coming from scaling the business efficiently even with the continued focused investments and our robust innovation pipeline and commercial efforts.
Lauren Budden: As a reminder, given the nature of our annuity model, we expect these launches to meaningfully contribute to our growth rate in 2025. We continue to expect the first half of the year to be in the high single digits range and to accelerate in the second half of the year to a range of high single digits to low double digits, primarily due to a more meaningful contribution from our Omnipod 5 UK and Germany launches, and to a lesser extent, the additional launches in 2024. Lastly, for drug delivery, we expect a 50% to 60% decline in line with the 2024 color we previously provided. Turning to 2024 Gross March.
Lauren Budden: We expect a range of 68% to 69% and an anticipated benefit from favorable product mix and manufacturing efficiency. Partially offsetting these tailwinds are higher costs associated with our new product launch. We expect gross margin in the second half of the year to be higher than the first half due to accelerating revenue throughout the year and continued manufacturing efficiency.
Speaker Change: I need you to be approximately $5 million to $6 million.
Speaker Change: In conclusion, we delivered another quarter and year of significant financial performance and strategic execution.
Speaker Change: We have strong momentum at the start of 2024 with many catalysts ahead and as a result, we are in a fantastic position to continue to grow and efficiently scale our business.
Lauren Budden: In 2024, we plan to expand both growth and operating margins while driving market growth. We expect operating expenses to increase as we invest in R&D and clinical trials and expand our sales force and other functions to support our commercial efforts and growth initiatives, including our near-term product line. Our Salesforce expansion includes hiring some reps specifically focused on pediatrics, a population for which Omnipod has always captured a large share. Even with increased investments, we have many opportunities to significantly expand margins and increase shareholder value, and we remain committed to doing just that. We expect the operating margin to be approximately 13%, up approximately 100 basis points from the 2023 adjusted operating margin.
Speaker Change: The global market opportunity for insulin are tremendous and we will continue to invest in innovation with an increased commitment to <unk> neck wicket margin expansion.
Speaker Change: We are well positioned to drive longterm value creation for our shareholders and to deliver on our mission for our customers.
Speaker Change: With that operator, please open the call for questions.
Speaker Change: Thank you if you have a question at this time. Please press the Starkey followed by the number one on your Touchtone telephone. If your question has been answered or you wished you remove yourself from the queue. Please press star one again, we are limiting each participants question to one however, it please feel free to go back in the queue and if time permits we.
Travesty: Will be more than happy to take your follow up questions at that time. Our first question comes from the line at the Travesty with Bank of America. Please go ahead.
Travesty: Thanks for the question I wanted to ask about the the gardens on U S growth.
Lauren Budden: When factoring in the 130 basis point year-over-year unfavorable impact in 2024 from the $20 million to $25 million shift in order timing, we expect operating margins to be approximately 200 basis points higher in 2024 over 2023. We expect operating margins to significantly improve in the second half of the year over the first half due to revenue ramping during the year and continued manufacturing improvement. We have many catalysts for growth in 2024 and considerable opportunities to drive further margin expansion over the near and long term, coming from scaling the business efficiently, even with the continued focus on investments in our robust innovation pipeline and commercial efforts. We expect capital expenditures to almost double from 2023 due to the timing of spend to support our planned 2024 production at our new Malaysia manufacturing facility, as well as investments to support continuous improvement efforts in our other manufacturing locations, and to a lesser degree Turning to our first quarter 2024 guidance, we expect total Omnipod growth of 15% to 18% and total company growth of 17% to 20%. Our total company revenue expectations exclude approximately six points of growth due to orders that have shifted into 2023.
Travesty: The mouth using year over year growth rate.
Travesty: Two per cent from stocking, which employs like 18 to 23 per cent versus come to the mid 20th before you started the script look there was really no change the guidance cause you just do it on dollars you're gonna go to the same place. So basically just some fries some clarification on on the U S. <unk>.
Travesty: And and how it's changed versus three months ago.
Chavez: Hey Chavez.
Chavez: So yeah.
Chavez: In November when we gave guidance it really hasn't changed much and argue as I mentioned in the prepared remarks, we had a 30 to 40 million dollar shift and revenue or sorry incremental revenue of that 10 to 15 million whether the increase in days on hand inventory levels and so that we had seen it the inventory.
Chavez: Levels brought down earlier in the first half of the year. So that was a piece of that the rest of it the 20th of 25 million.
Chavez: The ship that we saw an order of timing from Q1 Q for so for that that was in advance of our ERP and if you were to normalize for that which contributed about 12 point benefits are you asked revenue growth rate.
Really achieved the high end of our our guidance range there.
Chavez: Your next question comes from the lineup Robbie Marcus with J P. Morgan. Please go ahead.
Speaker Change: Hi, This is actually <unk> for Robbie and thanks for taking my question.
Speaker Change: You came off of a really great year on both the top and bottom lines with continued health and your patient grows in the U S.
Speaker Change: I was wondering if you could elaborate more on some of the key gross drivers to new patient groups as well as margin expansion in 2024 and beyond.
Lauren Budden: For U.S. Omnipod, we expect growth of 19% to 22%, which excludes over eight points of growth due to the orders that shifted into 2023. For international Omnipod, we expect growth of five percent to eight percent. On a reported basis, we estimate a favorable foreign exchange impact of approximately 100 basis points.
Speaker Change: Thanks for an awesome I'll take I'll take the first shot at that but then I'm sure going on me when it comes as well.
Speaker Change: <unk> <unk> <unk> <unk>, there's just a core driver to new Testament stripes wrote switches Omnipod five is clearly the most preferred product on the market, we'll be in new customer starch wherever we take omnipod five we lead a new customer starch.
Speaker Change: People coming up with M. P. R and we continue to take a lot of competitive sure. So yummy.
Speaker Change: <unk> five offering as it exists today.
Lauren Budden: Finally, we expect Q1 drug delivery revenue to be approximately $5 million to $6 million. In conclusion, we delivered another quarter and year of significant financial performance and strategic execution. We have strong momentum at the start of 2024 with many catalysts ahead, and as a result, we are in a fantastic position to continue to grow and efficiently scale our business. The global market opportunities for Insulet are tremendous, and we will continue to invest in innovation with an increased commitment to significant margin expansion.
Speaker Change: Is already an underlying wrote driver for us.
Speaker Change: Then there are a number of things that will bring some how can in 2024 that will drive a lot of growth will will be able to drive international expansion from your 0.5 and 2024 as we said we're going to get into get the G six product to market.
Speaker Change: The Netherlands, along with censored choice and you can add them to the first half.
Speaker Change: And as we've said by the end of 2024, we expect to have all my 0.5 available to the majority of our customers and our European mortgage and then obviously G. Seven so we're really excited to have been able to accelerate our G. Seven alomar by a couple of weeks a little bit earlier than our expectations. We've been working now with the Lamar for not quite three weeks.
Speaker Change: About two and a half weeks and uhm came to and to bring the full marketing Alicia G. Seven uhm during the year, which we think will continue to driving a customer starts for us. So we're very very excited about that so there's a lot of cattle is coming in renovation pipeline uhm that will drive growth on top of the already existing leaving market.
Operator: We are well-positioned to drive long-term value creation for our shareholders and to deliver on our mission for our customers. With that, Operator, please open the call for questions. Thank you. If you have a question at this time, please press the star key followed by 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.
Speaker Change: <unk> five, but I'm sure, they're going to want to pick up on at least I'm guessing or you want to pick up on some of what you ask for as well.
Speaker Change: Yeah. Thanks, Jim So yeah, we have.
Speaker Change: A lot of additional opportunities for improvement, especially if we exceed our revenue targets and you saw that in Q4, we had tremendous operating margin. It was over 20 per cent on adjusted basis Nike normalized for the revenue shift it was about 17%. So if we can exceed revenue we can have a lot of.
Operator: We are limiting each participant's question to one. However, please feel free to go back in the 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 the line of Travis Steed with Bank of America. Please go ahead.
Speaker Change: Incremental margin opportunity, but keep in mind that will be will be balancing that with investment. So as Jim mentioned, we have a lot of new product launches coming up and we want to make sure. We're executing on our strategic imperative to drive future growth in 2025 and beyond so we will be balancing that with the revenue dropped reached the bottom line.
Lauren Budden: Hey, thanks for the question. I wanted to ask about the guidance on U.S. growth. If you just do the math using year-over-year growth rates, you get 2 percent from stocking, which implies about 18 to 23 percent versus kind of the mid-20s guide before.
Speaker Change: Your next question comes from the lineup, Jeff Johnson with Bird. Please go ahead.
Jeffrey D. Johnson: Thank you good afternoon, Jim you're encouraging to hear that Oh, five and the majority of the you markets by the end of 2024. That's the good thing I didn't hear anything on G. Seven immigration with Oh five in Europe in 2024, I know you specifically.
Lauren Budden: But I know you said in the script that there was really no change to the guidance, and I guess if you just do it in dollars, you kind of get to the same place. So maybe you could just provide some clarification on the U.S. guide and how it's changed versus three months ago. Thank you, Chavez.
Jeffrey D. Johnson: Specifically, not providing that but any color you can provide their especially in the context of talking about your U S growth accelerating in 2024, just as the market is starting move to G. Seven and you need to get that F. M. R. G. Seven out there in the U S did and take advantage of that moved the G. Seven the Dexcom is seen so I guess you know it sounds like that lack of G. Seven integration.
Lauren Budden: Thanks for the questions. So, yeah. Just in November when we gave guidance, it really hasn't changed much in our view. As I mentioned in the prepared marks, we had a 30 to $40 million shift in revenue, or sorry, incremental revenue. Of that 10 to 15 million was an increase in days on hand inventory levels, so we had seen inventory levels brought down earlier in the first half of the year. So that was just a piece of it.
Jeff Johnson: Could be a headwind in 24 offset by the O five expanding D. U. So just how do we think about those two disparate factors if you well thanks.
Speaker Change: Yeah, Thanks, Jeff Hi, nice to nice to hear you hear from you.
Speaker Change: One way to think about this isn't where prioritizing the sequencing alright, and so we know that driving the integration with sensors and driving censor of choices we call. It for customers is really really important.
Lauren Budden: The rest of it, the 20 to 25 million was the shift that we saw in order timing from Q1 to Q4. So for that, that was an advance of our ERP. And if you were to normalize for that, which contributed about 12 points of benefit to our U.S. revenue growth rate, we really achieved the high end of our guidance rate. Your next question comes from the line of Ravi Marcus with J.P. Morgan. Please go ahead. Hi, this is actually Rohan for Ravi.
Speaker Change: And you can see in a way you can see what we're doing here because we were already in the L. M. R. With G. Seven in the U S. We're gonna learn a lot about that integration here, we feel very comfortable with it has been through website, but you know you put you put the album are out in the market to see the product in the wild right and make sure make sure you're happy with it make sure customers are having a great experience and will learn from.
Speaker Change: That alomar, unaware that will allow us to accelerate G. Seven in the U S. And then internationally, we haven't guided the timing on anything outside of the U S. M. G seven, but the <unk> important and that way <unk>.
Speaker Change: Very similarly, you know, we're we're looking to be able to accelerate R. O M. R for the Libra, two plus integration in Europe, and working hard to get that to market. The experienced we're having right now with the radiant trial, which is R. Libre integration Trialling. Your suggested that's a great word experience for our customers as well and so you can see where access.
Operator: Thanks for taking the question. You had a really great year on both the top and bottom lines, with continued health and new patient growth in the U.S. as well. I was wondering if you could elaborate more on some of the key growth drivers for new patient growth as well as margin expansion in 2024 and beyond. Thanks, Rohan. I'll take the first shot at that, but then I'm sure Lauren may want to comment as well.
Speaker Change: Alright, and that Alomar in Europe will learn from that a little more too.
Speaker Change: So and we haven't given any any timing guidance on on Libre for the U S. But you can see what we're doing is we're kind of pillar parallel processing, the two <unk> to maximize or learning and kind of optimize our resources across the geographies if that makes sense.
James Hollingshead: I mean, I think that the main, you know, there's just a core driver of New Customer Starts for us, which is Omnipod 5 is clearly the most preferred product in the market. We lead in New Customer Starts, wherever we take Omnipod 5, we lead in New Customer Starts for people coming up with MDI, and we continue to take a lot of competitive shares. So the Omnipod 5 offering as it exists today is already an underlying growth driver for us. Then there are a number of things that we'll bring to market in 2024 that will drive a lot of growth. We'll be able to drive international expansion for Omnipod 5 in 2024, as we said. We're aiming to get the G6 product to market in the Netherlands along with Sensor of Choice in the UK and Netherlands in the first half.
Speaker Change: Very high priority for us to get censor integrations up and running to give choice and also because because what we Wanna do is we're really prioritizing making sure that customers that want to be on <unk> can get on on me five five and that's our top priority is to drive. This you know it's really it's it's proven 155 is proving to be a revolutionary offer.
Speaker Change: Lots of people want to be unlimited five so we're working hard to make sure we get the sensors integrated as quickly as we can and then into the geography various geographies as quickly as we can to provide that kind of access an option to customers and I'm working hard to optimize the way. We're doing this so we can maximize are running in time to market.
Speaker Change: Our next question comes from the line of Jason Bedford with Raymond James. Please go ahead.
James Hollingshead: And as we've said, by the end of 2024, we expect to have Omnipod 5 available to the majority of our customers in our European markets. And then, obviously, G7... so we're really excited to have been able to accelerate our G7 LMR by a couple of weeks, a little bit earlier than our expectations. We've been in the market now with the LMR for not quite three weeks, about two and a half weeks, and aim to bring a full market release of G7 during the year, which we think will continue to drive new customer starts for us. So we're very, very excited about that. So there's a lot of catalysts coming in our innovation pipeline that will drive growth on top of the already existing leading market position for Omnipod 5. But I'm sure Lauren will want to pick up on, at least I'm guessing Lauren will want to pick up on some of what you have there as well.
Jason Bedford: Good afternoon, just an international is your expectation that you'll be able to capture price with with Oh P. Five and then kind of what is the gating factor here on some not launching into and launching into new European geography, as a little quicker than fully by year end.
Speaker Change: Yeah, Jason Great question, It's you know it it hasn't been we've talked about this consistently in the past or what we Wanna do with Omnipod five is generate the evidence we need which is you know we're doing with our G. Six C.
Jason Bedford: C T, which I mentioned in the comments, we're doing with our radio Trower January and the evidence we needed to to establish Omnipod five.
Jason Bedford: First line offering and then go and negotiate for reimbursement across our international markets.
Jason Bedford: Reimbursement levels that are commensurate with the extra value, we're creating with the <unk>. So our goal is to drive a price premium it's a little bit different from what we did in the U S. Because when we launched on me five five and you asked me left at the end of the pharmacy channel at pricing parity with dash, because we knew that would streamline trying to full coverage in the market. So we got you a full coverage.
Lauren Budden: Yeah, thanks, Jim. So yeah, we have a lot of additional opportunities for improvement, especially if we exceed our revenue targets. And you saw that in Q4. We had a tremendous operating margin. It was over 20% on a fair basis.
Jason Bedford: And European markets, what we need to do is make sure we're negotiating kind of <unk>.
Jason Bedford: Reimbursement bodies different in every market and there's tenders, there's ministries of health and so on but we need to negotiate those market by market, but we have to generate the evidence is required to be able to have that conversation. So far we've been very successful with that so you know with are working in the UK, we're very comfortable with where we've landed with reimbursement levels in the UK working in Germany.
Lauren Budden: And if you normalize for the revenue shift, it was about 17%. So if we can exceed revenue, we can have a lot of incremental margin opportunity. But keep in mind that we will be balancing that with investment. As Jim mentioned, we have a lot of new product launches coming up, and we want to make sure we're executing on our strategic imperative to drive future growth in 2025 and beyond. So we will be balancing that with the revenue, dropping three to the bottom. Your next question comes from the line of Jeff Johnson with Baird. Please go ahead.
Jason Bedford: And so on and so we're gonna continue to drive that and work really hard to achieve a premium for only five five.
Jason Bedford: Where we launch it Uhm and then remind me and the second part of your question. It was all the gating factors.
Jason Bedford: Can you factor until it gets a little bit different private market, sometimes it's sometimes this reimbursement sometimes it's you know sort of cloud connectivity. We've made a lot of progress on that ladder of technical front and then it's you know just preparing for commercial launch or making sure that everything is lined up to do that we're making terrific progress and as we've said I just wanted to Clara.
Operator: Thank you. Good afternoon, guys. Jim, it's encouraging to hear that O5 will be in the majority of EU markets by the end of 2024. That's a good thing. I didn't hear anything on G7 integration with O5 in Europe in 2024. I know you are specifically not providing that, but any color you can provide there, especially in the context of talking about your US growth accelerating in 2024, just as the market is starting to move to G7 and you need to get that FMR on G7 out there in the US to then take advantage of that move to G7 that Dexcom is seeing. So I guess, you know, it sounds like that lack of G7 integration could be a headwind in So just how do we think about those two disparate factors, if you will? Thanks. Yeah, thanks, Jeff. And hi, Nick.
Speaker Change: <unk> I actually I think Jeff just said that we said we'd be in the majority of our markets. We haven't said that what we've said is that by the end of 2024.
Jason Bedford:
Jason Bedford: Oh yeah.
Jason Bedford: There may be a technical problem on the call, but we sent by the end of 2024, we will have the majority of our European customers have on your 0.5 available.
Speaker Change: Our next question comes from the line of Larry Bagel Sandwich Wells Fargo. Please go ahead.
Speaker Change: Good afternoon, and thanks for taking the question I wanted to follow up on <unk> question on the guide itself.
Speaker Change: I I guess, the the crux Lauren at my question is if anything change from the Q3 call in from J P. Morgan. So you said the high end when you make these adjustments you said the high end of this guy that's implies mid twenties. So you know why the <unk> I mean is there was there an incremental change.
James Hollingshead: It's nice to hear from you. One way to think about this is that we're prioritizing the sequencing, right? And so we know that driving the integration with sensors and driving the sensor of choice, as we call it for customers, is really, really important. And you can see, in a way, what we're doing here, because we're already into LMR with G7 in the US. We're going to learn a lot about that integration. You know, we feel very comfortable with it as it has been through wear studies.
Speaker Change: Change and I think you said it J P. Morgan that new start to grow you every year.
Speaker Change: <unk> 24, I didn't hear that in your comment today and I'm just curious.
Speaker Change: <unk> your guidance philosophy in general is anything change from historically <unk> guided.
Speaker Change: Pretty conservatively. Thank you.
Speaker Change: Mmm.
Speaker Change: Larry we're having a technical problem on the call and so I'm Gonna I'm Gonna take my best shot at answering your question and so unkindness Nothing's really changed from our guide you know I think that the guide we've given on revenue in a new customer start to me is pretty consistent.
James Hollingshead: But you know, you put the LMR out in the market to see the product in the wild, right? And make sure you're happy with it, make sure customers are having a great experience. And we'll learn from that LMR in a way that will allow us to accelerate G7 in the US. And then, internationally, we haven't guided the timing on anything outside of the US and G7. But the LMR is important in that way.
Speaker Change: With the color we gave in the November call and the Big move is actually the the you know the unusual order pattern, where we had $20 million to $25 million of revenue pulled forward, we're still guiding to record new customer starts in 2024 at the the change the only real change in the guidance that we're giving compared to color is that regarding into a 13th.
Speaker Change: Roughly a 13% operating margin.
Speaker Change: For 2024, which is actually an increase from the color. We gave on the November call and there's there are a number of opportunities for us to do that but you know we delivered we delivered really strong offer any new phone through 2023 and actually exceeded what we are guided to for 2023, because if you remember our guide in 2023 it was <unk>.
James Hollingshead: Very similarly, you know, we're looking to be able to accelerate our LMR for the Libre 2 plus integration in Europe and working hard to get that to market. The experience we're having right now with the Radiant trial, which is our Libre integration trial in Europe, suggests that that's a great wear experience for customers as well. And so you can see we're accelerating that LMR in Europe; we'll learn from that LMR, too. And we haven't given any timing guidance on Libre for the US.
Speaker Change: <unk> digits, you know what you call. It like you know 99, and a half plus and we ended up delivering well above that and we're now guiding the 13, which is Loren explains in the prepared Thomas.
James Hollingshead: But you can see what we're doing is we're kind of parallel processing the two LMRs to maximize our learning and kind of optimize our resource use across the geographies, if that makes sense. Very high priority for us to get sensor integrations up and running to give us choice. And also because what we want to do is we're really prioritizing, making sure that customers that want to be on Omnipod 5 can get on Omnipod 5. And that's our top priority is to drive this. You know, it's really, it's proven. Omnipod 5 has proven to be a revolutionary offer. Lots of people want to be on Omnipod 5, so we're working hard to make sure we get the sensors integrated as quickly as we can and into the various geographies as quickly as we can to provide that kind of access and option to customers, and working hard to optimize the way we're doing it so we can maximize our learning in time to market. Our next question comes from the line of Jayson Bedford with Raymond James. Please go ahead. Good afternoon.
Speaker Change: Represents 100 basis points over what we achieved at the end of 2023, but.
Speaker Change: 200 basis points of roughly 200 basis points above what we would have achieved without the revenue pull forward that 13% Oh I guide is the only real changed from the color. We gave him in November if that makes sense.
Speaker Change: Our next question will come from the line I'm Margaret attacks or with William Blair. Please go ahead.
Margaret: Hi, good afternoon, Thanks for taking my question.
Margaret: Wanted to maybe follow up on a C. P. Prescribers you know obviously, that's number that continues to put a row quarter on quarter on quarter.
Margaret: Curious if you can provide any details around them are these folks routinely prescribing are you <unk>. The number of prescriptions you know maybe how does this compare to the number of home prescribers in the U S and sorry, it's along when it question, but it really gets at this this concept of how can you open up.
Margaret: The part of the intensive and fun patient population type one or type two that is being seen outside of the end of his office and really scale that effort. Thank you.
Speaker Change: Thanks, Margaret it's a great question and again I'll start and if if more or less to chime in on the back Uhm I'd. Welcome that you just to go back to contact we actually didn't put this in the prepared comments this quarter, but within the past week pointed out now the endo market is somewhere around seven to seven 7070, 500 and those in the U S. We.
Operator: Just on international, is your expectation that you'll be able to capture price with OP5 and then kind of what is the gating factor here on, not launching into, and launching into new European geographies a little quicker than fully by year end. Yeah, Jason, great question. It's, you know, it has been, we've talked about this consistently in the past, but what we want to do with Omnipod 5 is generate the evidence we need, which is, you know, we're doing with our G6 RCT, which I mentioned in the comments, we're doing with our radium trial, we're generating the evidence we need to, to establish Omnipod 5 as a first line offering, and then go and negotiate for reimbursement across our international markets, that, you know, reimbursement levels that are commensurate with the extra value we're creating with the Omnipod 5 offering.
Speaker Change: We know that a number of prescribers that we have are either endocrinologist themselves for their so called physician extenders, which would include newsprint nurse practitioners.
Speaker Change: A physician assistant, but we're clearly guinea prescription beyond that were clearly getting prescription right outside of Endo practices and P. C. P practices and in smaller practices in that dynamic continues to grow and we can see it in her one day that we don't have perfect insight into it out of the various available data.
Speaker Change: But we can see we're reaching more and more health care practitioners and that's <unk>. We believe are doing that through word of mouth through our promotion activities, which include both directed patient activities and also directed physician promotional activities online and then the other thing I'll say is that it's been very very powerful for US you know sort of along the.
Speaker Change: Same lines. The Omnipod go commercial pilot has proven to be a terrific investment for us this year, because what we're learning a lot more about what happens in the primary care channel for people living with diabetes and I'm just a couple of things we're seeing uhm, we've learned a lot about the target patient population for me if I go.
Operator: And so, our goal is to drive a price premium; it's a little bit different from what we did in the US, because when we launched Omnipod 5 in the US, we launched it into the pharmacy channel at pricing parity with Dash because we knew that would streamline time to full coverage in the market. So we got to full coverage. In European markets, what we need to do is make sure we're negotiating a kind of, you know, reimbursement body. It's different in every market, you know; there are tenders, there are ministries of health, and so on.
Speaker Change: We've learned that primary care practices when they think pump. They think they include G thing with the tube that they would never prescribed and then when they see omnipod.
Speaker Change: There's a little bit of a lightbulb on over the head dynamic and they say wait you know what that's so easy my my patience could do that we could do that and so you know.
Speaker Change: We're very confident we're going to be able to drive a demand for the omnipod platform across primary care and I think we're seeing more type one patient so we anticipated and the primary care channels. So to your point, we're very optimistic that as we continue to drive learnings out of her army got Omnipod go pilot, we're gonna be able to to find a new kind of new avenues for.
James Hollingshead: But we need to negotiate those market by market, but we have to generate the evidence that's required to be able to have that conversation. So far, we've been very successful with that. So, you know, working in the UK, we're very comfortable with where we've landed with reimbursement levels in the UK, working in Germany, and so on. And so we're going to continue to drive that and work really hard to achieve a premium for OmniPod 5 everywhere we launch it. And then remind me the second part of your question; it was, oh, the gating factor. Paying factors, it's a little bit different in every market.
Speaker Change: <unk> driving demand for army find him really driving driving upon therapy on me if I'm therapy.
Speaker Change: To the world where patients need it most and so we're very optimistic about that.
Speaker Change: And so we we continue to see that trend is a positive signal for us, but we're really excited about what we're learning out in the world with our commercial probably go.
Speaker Change: Your next question will come from the lines of Josh Jennings with P. D. Cowan. Please go ahead.
Josh Jennings: Hi, good afternoon, and thanks for taking the question.
James Hollingshead: Sometimes it's reimbursement, sometimes it's, you know, sort of cloud connectivity. We've made a lot of progress on that latter technical front, and then it's, you know, just preparing for commercial launch and making sure that everything is lined up to do that. We're making terrific progress, and as we've said, I just want to clarify. Actually, I think Jeff just said that we said we'd be in the majority of our markets. We haven't said that. What we've said is that by the end of 2024. Oh, yeah.
Josh Jennings: Just hoping to better understand pricing dynamics to the pharmacy, telling me U S <unk>, probably part five dash.
Josh Jennings: This was the reimbursement stable.
Josh Jennings: But it was receiving for for Omnipod five an amount of five dash 23.
Josh Jennings: Weird, how should we factor in uhm reimbursement levels and pricing from you confirm a dash in 2024. Thanks.
Speaker Change: Yeah, So really it's more about that volume.
Speaker Change: We did get a price list <unk> 2023 from the conversions and for the pharmacy <unk> <unk> have largely Adam.
James Hollingshead: There may be a technical problem on the call, but we said by the end of 2024, we will have the majority of our European customers have OmniPod 5 available. Our next question comes from the line of Larry Biegelsen with Wells Fargo. Please go ahead. Good afternoon.
Speaker Change: Alright, like like complete by this point.
Speaker Change: So we're not seeing that going forward, we could have a.
Speaker Change: Price increase like we normally do in early September which is pretty minimal it just under three per cent cut in line with them cost of living adjustment.
Operator: Thanks for taking the question. I wanted to follow up on Travis's question on the guidance. I guess the crux, Lauren, of my question is, did anything change from the Q3 call and from JPMorgan? So you said the high end, when you make these adjustments, you said the high end of this guidance implies mid-20s. So, you know, why the high end?
Speaker Change: And just to add a line there that we don't see the full benefit of that because some of it goes to that.
Speaker Change: Mm checks every day, it's added to the wholesaler fees. So at this point for 24 alright.
Speaker Change: Pretty much say that you should focus on the volume that the price has leveled off the great <unk> that we are getting that continued price, let's going forward, but it shouldn't be an incremental change.
James Hollingshead: I mean, was there an incremental change? And I think you said at JPMorgan that news starts to grow year over year in 2024. I didn't hear that in your comment today, and I'm just curious, Lauren, your guidance philosophy in general, has anything changed from historically? Larry, we're having a technical problem on the call.
Speaker Change: Your next question comes on the line I'm Joanne Ranch what city. Please go ahead.
Speaker Change: Good afternoon. This is Anthony on for Joanne Thanks for taking our questions Twenty-twenty Forest Smith.
Anthony: You know, maybe 2025 as well, but can you talk over the longer term 2026, and beyond where gross margins and operating margins potentially cause to go and how you got there. Thank you.
James Hollingshead: And so I'm going to I'm going to take my best shot at answering your question. And so on guidance. Nothing's really changed from our guide. You know, I think that the guidance we've given on revenue and on new customer starts remains pretty consistent with the color we gave on the November call. And the big move is actually the unusual order pattern where we had 20 to $25 million of revenue pulled forward. We're still guiding to record new customer starts in 2024. The change, the only really change in the guidance that we're giving compared to color is that we're guiding to roughly a 13% operating margin for 2024, which is actually an increase from the color we gave on the November call.
Speaker Change: Yeah, I'm happy to start off and then.
Speaker Change: Free to add on yeah, we definitely feel like we have a room for a Samsung galaxy.
Speaker Change: As an address Martin in the near term and and a longer time, you know we get great. Thank you for and we have lots of opportunity that we're setting up with the product launches that we have this year that all you.
Speaker Change: Accelerate the top line and be able to add allow us to <unk>, we haven't put out the items beyond 2024, but we are planning on doing a long range plan later on this year.
Speaker Change: Your next question will come from the line of Matthew O'brien with Piper Sandler. Please go ahead.
Matthew F. Farrell: Afternoon. Thanks for taking my question and it is going to be one question I promise. The first part is just more clarification kind of hilarious question earlier, but I'm looking at the stock down kind of.
Matthew F. Farrell: Mid to upper single digits in the in the aftermarket I think it's on this guidance commentary and again the high end of the range get you to that 25 was it or was it a street modeling issue at 25 per cent versus you know where you know cause it should've been 23, 24, <unk> I'm, just making sure there's nothing competitively or pharmacy related that we should really be.
James Hollingshead: And there are a number of opportunities for us to do that. But, you know, we delivered really strong operating performance through 2023 and actually exceeded what we had guided to for 2023. Because if you remember our guide in 2023, it was the site single digits, you know, what you call it, like nine, nine and a half plus, and we ended up delivering well above that. And we're now guiding to 13, which, as Lauren explained in the presentation, represents 100 basis points over what we achieved at the end of 2023 but more than 200 basis points, roughly 200 basis points above what we would have achieved without the revenue That 13% OI guide is the only real change from the color we gave in November, if that makes sense. Our next question will come from the line between Margaret Caxer and William Blair. Please go ahead.
Speaker Change: Be worried about and then the real question is Jim you know when you guys came out with a five I think he went from 80 20 M. B I to competitive conversions all the way to 60 40, and then went to 70 30, an hour back to 80 20 is it getting tougher and tougher to take those competitive conversions and with G. Seven do you think that that will start.
Speaker Change: Get a little bit better a little bit easier throughout the course of this year.
Speaker Change: Why do we will have more and started on on the on the guide and then I'll pick up on the on the competition go ahead one.
Speaker Change: <unk>, 20th 24, even with a seven up and all.
Speaker Change: All your benefit that we realized in 23 was starting to very strong revenue growth. We expect to achieve almost 2 billion in revenue and our guide represents 300 million of revenue growth in terms of dollars. So your question in terms of what changed from a cowboy provided it was really just that revenue chefs.
Operator: Hey, good afternoon, guys. Thanks for taking the question. Wanted to maybe follow up on the HCP prescribers. You know, obviously, that's a number that continues to grow quarter after quarter and quarter after quarter. Curious if you can provide any details on them.
James Hollingshead: You know, are these folks routinely prescribing? Are you seeing growth in the number of prescriptions? You know, maybe how does this compare to the number of pump prescribers in the U.S.? And sorry, it's a long-winded question, but it really gets at this concept of how can you open up the part of the intensive insulin patient population, type 1 or type 2, that is seen outside of the endoscopy office and really scale that effort. Thank you. Thanks, Margaret. It's a great question. And again, I'll start, and if Lauren wants to chime in on the back, I'd welcome that. Just to go back to context, we actually didn't put this in the prepared comments this quarter, but in the past, we've pointed out that the endo market is somewhere around 7,000 to 7,500 endos in the US. We know that a number of prescribers that we have are either endocrinologists themselves or their so-called physician extenders, which include nurse practitioners and physician assistants, but we're clearly getting prescriptions beyond that.
Speaker Change: 20th of 25 million of orders that were would've been two lines that were placed in advance of R. E. R. P implementation. So the estimated impact of that is 3.4, My total company and for <unk> U S. Omnipod.
Speaker Change: All our guide as strong and as I mentioned, we have many catalysts the crowd and 24 that is gonna help accelerate it.
Speaker Change: Particularly in the back half and what does need a customer sorry, and provides strong revenue graph for it for the ear and and for 2025 and beyond.
Speaker Change: Nah, so uncomfortable I wanted it.
Speaker Change: Oh, sorry, I was just gonna say that mailed it so I thought I heard you say that you asked them.
Speaker Change: The Street's modeling now 25 per cent on a normalized basis. So if I got that right that you said that the U S. That's exactly right for the year on a normalized.
Speaker Change: Normalized basis unborn nailed it when she said the four point in pastel Y Lauryn provided some color on the T. Three call that we wouldn't be in mid twenties, Here's your currency in 24 to 26, you know around there.
James Hollingshead: We're clearly getting prescription writing outside of endo practices in PCP practices and in smaller practices, and that dynamic continues to grow, and we can see it in our own data. However, we don't have perfect insight into it from the various available data. But we can see we're reaching more and more healthcare practitioners, and we believe we're doing that through word of mouth, through our promotion activities, which include both direct-to-patient activities and also direct-to-physician promotional activities online. And then the other thing I'll say is that it's been very, very powerful for us, sort of along the same lines. The Omnipod Go commercial pilot has proven to be a terrific investment for us this year because what we're learning, and we're learning a lot more about what happens in the primary care channel for people living with diabetes.
Speaker Change: That's a good point where spot on what we were expecting for U S and that's about it if you do the math about 21% on a normalized basis for total Omnipod and it gets you to the total company throughout the 20th so spot on from the color of that line gave in November we just take next step that fast, which you know is the 20th at 30 <unk>.
Speaker Change: <unk> <unk> that happens and Zap or 20 to 25 ends up being double right to the 40 to 50, because with that comes out of one ear and does entity out there. So that's what I should assign a normal set so hopefully that answers your question on that please.
Speaker Change: Sorry again.
Speaker Change: No that's it so and I'm <unk> you know we can always clarify this too well I tried so but it's you know it's a <unk>.
Speaker Change: Decrease the denominator increase the numerator for 24, you get the normalized number right. So it's it's a double that's a double whammy on that 20 to 25 so.
James Hollingshead: And just a couple of things we're seeing. We've learned a lot about the target patient population for Omnipod Go. We've learned that primary care practices, when they think pump, they think of a big, kludgy thing with a tube that they would never prescribe. And then when they see Omnipod, there's a little bit of a lightbulb coming on over their heads dynamic, and they say, wait, you know what? That's so easy. My patients could do that.
Speaker Change: The underlying guide remains the same.
Speaker Change: <unk> on the on the competition Yeah. We continue to have really good new customers starch and historically, we always had 80, 20th you know of M. P. I N and competitive switching after the launch a mummified five we obviously did it caught a lot of competitive switchers and we've done really really well we continue to have so you know.
James Hollingshead: We could do that. And so, you know, we're very confident we're going to be able to drive demand for the Omnipod platform across primary care. And I think we're seeing more type 1 patients than we anticipated in the primary care channel. So to your point, we're very optimistic that as we continue to drive learnings from our Omnipod Go pilot, we're going to be able to find new, you know, kind of new avenues for driving demand for Omnipod and really driving pod therapy, Omnipod therapy, into the world where patients need it most. And so we're very optimistic about that. And we continue to see that trend as a positive signal for us, but we're really excited about what we're learning out in the world with our commercial pilot with Go. Your next question will come from the line of Josh Jennings with TD Cowen.
Speaker Change: If you'd think about pre pre omnipod, five and that 20 per cent of competitive switchers and with only about five and 20 per cent of competitive switchers. It's a larger number that it was right. So because new customer starts are up overall. So we continue to do very very well and you know the underlying dynamics there as we also retain the vast and.
Speaker Change: Majority of customers that we get from competitors retention is very very strong and you said that we do thank you know we had the benefit now of hearing Uhm are two competitors calls and we have the benefit of seeing what's happening on the market. We don't see <unk> you know, there's little things around the edges I would say, we don't see any fundamental underlying shift in the competitive dynamic omnipod <unk>.
Speaker Change: <unk> continues to be the preferred product, but I will say that one of our competitors has done a better job of <unk> the bleeding in their installed base and so you you can see a little bit of that dynamic going on in the market, but we're still clearly the preferred offer so clearly winning with empty I and just winning with new customer starts over all very very clearly isn't working.
Operator: Please go ahead. Hi. Good afternoon.
Operator: Thanks for taking the question. I was just hoping to better understand pricing dynamics through the pharmacy channel in the U.S. for Omnipod 5 and Dash. Is reimbursement stable that Insulet was receiving for Omnipod 5 and Omnipod Dash in 2023? And how should we factor in reimbursement levels and pricing for Omnipod 5 and Dash in 2024? Thanks.
My Kratky: Your next question comes from my Kratky with Leering partners.
Mary Kratky: Hi, everyone. Thanks for taking your questions.
Mary Kratky: So you've capitalize on having a competitive advantage in type two with broad pharmacy access how are you planning on sending that physician the market as we start to see additional <unk> extended the pharmacy channel on both the near term basis, and then looking at 2025.
Lauren Budden: Yeah, so really, it's more about a volume business. But at this point, we did get a big price lift throughout 2023 from the conversions into the pharmacy channel. But as we've mentioned previously, those conversions have largely, are largely complete at this point, so we're not seeing that going forward. We did have a price increase like we normally do in early September, which was pretty minimal. It's just under 3%, kind of in line with the cost of living adjustment.
Speaker Change: Great question. Thank you Uhm pharmacy is you know our offer the Omnipod platform offer is much better suited to the pharmacy channel.
Speaker Change: Then to <unk>. This is much much better suited to pumps at the end of the day continued to be durable equipment and there's all kinds of things that you know I could go into the weeds here and talking about this but I'll just say, it's not a surprise that we see competitor is trying to figure out how to get into pharmacy channel with a gerbil tube bumped because we've been so successful in establishing the pharmacy channels for a I D and.
Lauren Budden: So, just keep in mind there, though, we don't see the full benefit of that because some of it goes to the EDM in terms of rebates and to the wholesaler fees. So, at this point for 2024, I would pretty much say that you should focus on the volume and that the price has leveled off. The great news is that we are getting that continued price lift going forward, but it shouldn't be an incremental change. Your next question comes from the line of Joanne Wuensch with Citi. Please go ahead. Afternoon, this is Anthony on behalf of Joanne.
Speaker Change: As we would expect competitors are we've established market leadership across basically the whole range of our offer and competitors are gonna Chase that it's theirs. What we've learned is there is a very big learning curve and pharmacy, it's very very different from the D. M V channels, the economics work better for us because.
Speaker Change: There is.
Speaker Change: In all cases, the value is actually in the <unk> in the in the pump, whether it's durable pump, where it's the pot and the fact that the value is created in Arkansas, <unk>, which is the pod gives us an inherent advantage as we you know like it starts to get a little abstract but it gives us an inherent advantage as we're in that channel and you couple that with the fact that we have very <unk>.
Operator: Thanks for taking our question. 2024 is an investment year, you know, maybe 2025 as well. But can you talk over the longer term, you know, 2026 and beyond, where gross margins and operating margins potentially could go and how you get there? Thank you. Yeah, I'm happy to start off, and then Jim, feel free to add on.
Speaker Change: Wide coverage in the pharmacy channel, we have established contracts across the Pbms and we've had very successful growth with all of our premium burgers. We think we have a very defensible position there.
Speaker Change: People, who use insulin go in to the pharmacy to get their insulin whether they're getting a familiar to a retail pharmacy. So it's a great place for them to also get three IV pump therapy, and Omnipod continues to be very uniquely positioned in the value properly omnipod. The pharmacy channel will continue to be very uniquely physician doesn't go forward.
Lauren Budden: Yeah, we definitely feel like we have room for expansion both on operating margin and gross margin in the near term and in the longer term. You know, we did great in Q4 and we have lots of opportunities as we're setting up with the product launches that we have this year that'll accelerate the top line and be able to allow us to drop more through. We haven't put out guidance beyond 2024, but we are planning on doing a long-range plan later in the year. Your next question will come from the line of Matthew O'Brien with Piper Sandler. Please go ahead. Afternoon, thanks for taking my question. And it is going to be just one question, I promise.
Speaker Change: Your next question will come from the line of Chris Escalate with <unk>. Please go ahead.
Chris Escalate: Thanks, Jim <unk> your comments on what you've learned so far from the go L. M. R. We're really interesting sounds like it's going pretty well, but then I think I heard the guidance really doesn't assume any benefit from go in 24, which makes it sound like a full launch is planned anytime soon.
Speaker Change: Are you thinking about the timing for full launch and what's really the gating factor there what boxes do you need to check before you are ready to expand the commercialization.
Operator: The first part is just more clarification, kind of to Larry's question earlier, but I'm looking at the stock down kind of, You know, mid to upper single digits in the aftermarket, and I think it's on this guidance commentary, and again, the high end of the range gets you to that 25, was it a street modeling issue at 25% versus, you know, where we, you know, because it should have been 23, 24, I'm just making sure there's nothing competitively or pharmacy-related that we should really be worried about, and then the real question is, Jim, you know, when you guys came out with O5, I think you went from 80-20 MDI to competitive conversions all the way to 60-40, and then it went to 70-30, now we're back to 80-20. Is it getting tougher and tougher to take those competitive conversions? And with G7, do you think that that will start to get a little bit better, a little bit easier throughout the course of this year? Why don't we we'll have Lawrence start on the on the on the guide and then I'll pick up on the on the competition. Go ahead.
Speaker Change: Yeah. That's a great question the way to think about on me. If I go is that you know we <unk>, we hear a different language about this and I'd just be really clear we're.
Speaker Change: We're not unlimited mark relationships with go we're in a commercial pilot alright.
Speaker Change: Alright, so that's a step before I think I said this last quarter on a call as well that's a step before an L. M R.
Speaker Change: The product itself is ready you know it's out on patience is fully approved we continued to grow coverage for US you know so that's a step but we're ahead of schedule and coverage. So the way to think about the Omnipod go commercial pilot is beginning factor is not tiny it's learning alright. So what we're what we're using it for is to establish the right commercial model both for <unk>.
Speaker Change: Go and for the the primary care Chang.
Speaker Change: And one of the reasons were so excited about the pilot is that we are learning an awful lot out of that pilot and so and you know where where we're gonna land on this thing whether we commercialized in 24 with go we commercialized you know get some more of an effort more than 24 sometime in 25.
Speaker Change: Where are we gonna land is we're gonna be in the primary care channel first and second.
James Hollingshead: Sure. So, for 2024, even with the significant volume benefit that we realized in 2023, we're starting to see very strong revenue growth. We expect to achieve almost $2 billion in revenue, and our guide represents $300 million of revenue growth in terms of dollars. So, your question in terms of what changed from the call we provided, it was really just that revenue shift of $20 to $25 million of orders that would have been in Q1, but were placed in advance of our ERP implementation.
Speaker Change: You know one way or another we're gonna we're gonna have <unk> primary care and the other thing is we will have the broadest offering for people living with type two diabetes, who need insulin delivery. So we're already in the market leader with dash in that space very clearly we know you thought we have are pivotal trial go into <unk> five and was at least as we said before we know your five five is actually being yourself label.
Speaker Change: And a lot of cases were not promoting omnipod five off label, but we'll have you know our goal is to have the label for Omnipod five in the short order coming out of our little trial, and we will continue to have a plan to file with the F. D. A for that label extension 24 and will have on me if I go and that gives you the whole coverage for people using insulin with type two all the way from I'm initiating the angel.
Speaker Change: Basil insulin too I'm using intensive insulin and so we'll have that foreclosed for portfolio products and we will have a very clear way to commercialize that in both primary primary care in in the endocrinology channels. So that's why I say I'm very excited about the commercial pilot without me. If I'd go we are learning a ton and it's gonna make us it's gonna make us much better commercially as we.
Lauren Budden: So, the estimated impact of that is three points on the total company and four points on U.S. Omnipod. So, overall, our guidance is strong, and as we've mentioned, we have many catalysts for growth in 2024 that's going to help accelerate it, and particularly in the back half with those new customer starts, and provide strong revenue growth for the year and into 2025 and beyond. Matt, I'm sorry, Jim, I was just going to say Matt, you nailed it.
Speaker Change: Get into that and get that full portfolio on market.
Speaker Change: Our next question will come from the line of Steve like name with Oppenheimer. Please go ahead.
Steve: Thank you hi, guys.
Steve: As you you start opening up the opportunity here to the Libre platform outside of the U S. And then in the U S. Can you give us your latest thoughts on the size of that opportunity. You know there's been estimates on what you would that new opportunity set looks like would be great to get your latest color on that thanks.
James Hollingshead: I thought I heard you say that U.S., the street's modeling now 25% on a normalized basis. So if I got that right, that you said that was the U.S., that's exactly right for the year on a normalized basis. And Lauren nailed it when she said the four-point impact.
James Hollingshead: So when Lauren provided some color on the Q3 call that we would be in the mid-20s, she was referring to 24 to 26, you know, around there. And, you know, at the midpoint, we're spot on what we were expecting for U.S. And that's about, if you do the math, about 21% on a normalized basis for total Omnipod, and it gets you to the total company growth of 20. So it's spot on from the color that Lauren gave in November. We just didn't expect that shift, which is the 20 to $30 million shift that happens ends up, or 20 to 25 ends up being double, right, to the 40 to 50 because it comes out of one year and goes into the other. So that's where she was trying to normal set it.
Speaker Change: Yeah, we we think it's a really big opportunity you know if if you if you look at the the sensor market.
Speaker Change: You've got millions of people using dexcom centers and millions of people using avid sensors.
Speaker Change: So the the <unk> the G 67 family products, and <unk> and now emerging Libre three family products.
Speaker Change: And by creating the integration across that range. So you know prioritizing G. Seven prioritizing let me Rachel plus and then three that were working in parallel it opens up a really large substantial market for us. The two you know, we we love working with both of our partners. They both have great technology, they're both really good partners development pathway with both of them.
Speaker Change: Really strong they're slightly they are slightly different positions in the in the main geographies of U as in Europe in terms of their installed base with both of them have very and very large installed basis and both of them have as we've always said C. G. M. Paves road for us because people get used to have you been on body experience with a sensor and it makes a.
James Hollingshead: So hopefully, that answers your question on that. Sorry, Jim. No, so, and I'm, you know, we can always clarify this offline, right? So, but it's a, you know, it's a decrease the denominator, increase the numerator for 24, and you get the normalized number, right? So it's, it's a double whammy on that 20 to 25. But the underlying guide remains the same. On the competition, yeah, we continue to have really good new customer starts. And historically, we always had 80-20, you know, of MDI and competitive switching. After the launch of Omnipod 5, we obviously caught a lot of competitive switchers.
Speaker Change: Much easier for them to then jumped to an on body experience with an omnipod.
Speaker Change: And so we you know we think it opens up you can go look at the market shares the estimated market shares for two partners, but we think it will be <unk> integrations open up a large installed base both in Europe, and the U S of people, who will be ready for Omnipod because there there you still nobody's C. G M experience.
Speaker Change: Your next question will come from the line of Marine Capello with B T. I G. Please go ahead.
Marine Capello: Hey, good afternoon San-juan for Murray, Thanks for taking a question maybe I can follow up on some of the type to comment on.
James Hollingshead: And we've done really, really well. And we continue to do so. So, you know, if you think about pre-Omnipod 5 and that 20% of competitive switchers, and with Omnipod 5 and 20% of competitive switchers, it's a larger number than it was, right?
Marine Capello: You know just looking at pivotal data coming up at 80, a N N than filing for a label expansion.
Marine Capello: How much of an uplift could that be you know once you do get <unk> label. There considering you know 2025 per cent of new patient starts already coming from type too. Thanks.
James Hollingshead: So because new customer starts are up overall, we continue to do very, very well. And, you know, the underlying dynamic there is that we also retain the vast majority of customers that we get from competitors. Retention is very, very strong.
Speaker Change: Thanks, Sam <unk>. If you just look at the size of the market's there and and you know I'll I'll repeat numbers that we share before in the U S or about 1.6 million people living with type one diabetes and that market is about probably something less than 40 per cent penetrated with a I D therapy.
James Hollingshead: Having said that, we do think, you know, we have the benefit now of hearing our two competitors' calls. And we have the benefit of seeing what's happening out in the market. But we don't see, you know; there are little things around the edges, I would say.
Speaker Change: Then in the type to market there somewhere between three and 4 million people living with type two who are on Basil only therapy.
James Hollingshead: We don't see any fundamental underlying shift in the competitive dynamic. Omnipod 5 continues to be the preferred product. But I would say that one of our competitors has done a better job of staunching the bleeding in their installed base. And so you can see a little bit of that dynamic going on in the market. But we're still clearly the preferred offer, still clearly winning with MDI, and just winning with new customer starts overall very, very clearly. Your next question comes from Mike Kratke with Learing Partners. Hi everyone.
Speaker Change: And somewhere around two and a half million people living with type two in the U S who need intensive insulin therapy. So based on the bus Polish.
Speaker Change: Uhm Omnipod five is really aimed at that intensive insulin therapy population is about two and a half million people in the U S.
Speaker Change: And therefore, it some larger and market than <unk>, Please and now with its current label.
Speaker Change: We know that that market is less than five per cent penetrated with AIG therapy, and we're already the market leader in that in that segment of the market because omnipod dash has a label there and we know where the clear market leader in space. So we're very optimistic Omnipod five is very easy to use it takes a lot of the burden off of managing your diabetes.
Operator: Thanks for taking our questions. So you've capitalized on having a competitive advantage in Type 2 with broad pharmacy access. How are you planning on defending that position in the market as we start to see additional farms expand into the pharmacy channel on both a near-term basis and then looking ahead to 2025? Great question, thank you. Pharmacy is, you know, our offer, the Omnipod platform offer, is much better suited to the pharmacy channel than tube pumps are. Just much, much better suited.
Speaker Change: That's why it's been so successful in that iPhone population and we're very optimistic about that value proposition going into the intense of insulin using type two population, which is a larger and market than the one we're playing it today. So we think it is a really important opportunity in a market that by the way will continue to grow over time.
Speaker Change: We have time for one more question. Your final question comes on the line at Danielle and tells me with you B S. Please go ahead.
Danielle: Hey, good afternoon. Thanks, so much for squeezing me in and taking my question. Just a question on the wholesaler stacking and that whole dynamic because it is something you know now we have to start thinking about in the model that and I know, it's unpredictable, but qualitatively maybe you could talk about how how much visibility you haven't.
James Hollingshead: Tube pumps, at the end of the day, continue to be durable equipment. And there's all kinds of things that, you know, I could go into the weeds here and talk about this, but I'll just say, it's not a surprise that we see competitors trying to figure out how to get into the pharmacy channel with a durable tube pump because we've been so successful in establishing the pharmacy channel for AID. And, you know, as we would expect, competitors are, we've established market leadership across basically the whole range of our offer, and competitors are gonna chase that. It's, there's, what we've learned is there's a very big learning curve in pharmacy. It's very, very different from the DME channel.
Danielle: When that part that gets <unk> goes onto a patient I guess trying to get a sense of you know is this something that's gonna happen to this level of every single quarter. If you know they are fine if they're coming off the shelves very quickly how long does.
James Hollingshead: The economics work better for us because, you know, in all cases, the value is actually in the pump, whether it's a durable pump or it's the pod. And the fact that the value is created in our consumable, which is the pod, gives us an inherent advantage as we, it starts to get a little abstract, but it gives us an inherent advantage as we're in that channel. And you couple that with the fact that we have very, very wide coverage in the pharmacy channel. We have established contracts across the PBMs, and we've had very successful growth with all of our PBM partners. We think we have a very defensible position there. People who use insulin go into the pharmacy to get their insulin, whether they're getting it, you know, from mail-order or retail pharmacies, so it's a great place for them to also get their AID pump therapy, and Omnipod continues to be very uniquely positioned, and the value proposition of Omnipod in the pharmacy channel will continue to be very uniquely positioned as we go forward Your next question will come from the line of Chris Pasquale with Nefron. Please go ahead.
Speaker Change: Stocking sort of sit on the shelf there.
Speaker Change: Yeah, I mean, it doesn't really.
Speaker Change: Stay on the shelf that long anyway.
Speaker Change: It's a pretty efficient channel in terms of the visibility into at the day with an animal style, that's not something that we ever included in our guidance and that's something that we can't control himself. Unfortunately this quarter, we had the double whammy of them, taking that and I'm sorry, he's level back up after they had taken him down earlier in the year.
Speaker Change: And then at the same time, we had the ERP Uhm <unk> I don't expect that we'd say something of that magnitude, but again when we have something like that's what we do is we we call it out and tell you when it happens we don't have them.
Speaker Change: The ability to guide you like it's not something in Arkansas.
Speaker Change: And we do have time for one more question that question woke up on the line if not mixed up with Barclays. Please go ahead.
Barclays: Great. Thanks, so much uhm, so maybe a bit of a two parter good news and it may be challenging news question. If I could just at the end is you mentioned that you were looking for acceleration.
Operator: Thanks, Jim. Your comments on what you've learned so far from the Go LMR were really interesting. Sounds like that's going pretty well. But then I think I heard the guidance really doesn't assume any benefit from Go in 24, which makes it sound like a full launch isn't planned anytime soon. How are you thinking about the timing for a full launch? And what's really the gating factor there?
Speaker Change: <unk>.
Barclays: 127 information and let me given given the new patient sure that you're catching now I just asked maybe what's what's you know it's almost it gets very high growth and it's very high share of mutation. So so what additional <unk> do you get.
James Hollingshead: What boxes do you need to check before you're ready to expand commercialization? Yeah, great question. The way to think about Omnipot Go is that, you know, we hear different languages about this. And I just want to be really clear. We're not in limited market relations with Go; we're in a commercial pilot, right?
Barclays: With G seven that you're not already capturing distant and any advantage you seem to be having in the clinic.
Speaker Change: Clinic and then the other question.
Speaker Change: Is looking out of your 18 months or so.
Speaker Change: Not certain of course, but it certainly seems like there's going to be at some point another two bliss.
James Hollingshead: And so that's a step before, I think I said this last quarter on our call as well, that's a step before an LMR. The product itself is ready, you know, it's out on patients, it's fully approved. We continue to grow coverage for it, you know, so that's a step, but we're ahead of schedule and coverage. So the way to think about the Omnipod Go commercial pilot is that the gaining factor is not timing, it's learning, right?
Speaker Change: On the on the market from one of your competitors.
Speaker Change: Or more so.
Speaker Change: Let me just take about your how do you think about that how do you prepare for that have you.
Speaker Change: You know look to continue your leadership in that segment and.
Speaker Change: Investors think about that if I can grow with potentially.
Speaker Change: <unk>.
Speaker Change: Thanks, Matt I'll I'll do those in reverse order. The first one is on the on the toothless form factor.
Matt: We obviously watch our competitor pipelines as closely as we can and in terms of what is out there publicly. So we can see we don't see anything coming in that timeframe, that's even close to what what we have on market right now with all my blood five distinct.
James Hollingshead: So what we're using it for is to establish the right commercial model, both for Go and for primary care. And one of the reasons we're so excited about the pilot is that we are learning an awful lot from that pilot. And so, and, you know, where we're going to land on this thing, whether we commercialize in 24 with Go or we commercialize, you know, get to more of an FMR in 24 or sometime in 25, where we're going to land is that we're going to be in the primary care channel first and second. And the other thing is that we will have the broadest offering for people living with type 2 diabetes who need insulin delivery.
Speaker Change: Just in terms of the whole package the convenience of ease of use the the scale ability where experience automated needle insertion you know like we could go on and on about the features yet, but we are very confident in our competitive position were never complacent. We have a lot of respect for our competitors and we know that what because omnipod.
Speaker Change: Five omnipod in general, but <unk> five has been so successful.
Speaker Change: Everybody wants to chase it so that just makes sense and that's how competition works, but we are very confident in our competitive position and we don't see anything coming in anybody's pipeline that even matches, what we have and we're going to continue to drive innovation. So we're going to extend our Lee.
James Hollingshead: So we're already the market leader with DASH in that space, very clearly. We know Omnipod, we have our pivotal trial going to Omnipod 5, and as we said before, we know Omnipod 5 is actually being used off-label. In a lot of cases, we're not promoting Omnipod 5 off-label, but we'll have, you know, our goal is to have the label for Omnipod 5 in short order coming out of our pivotal trial.
Speaker Change: On the first part of your question. It's it's a really good question. Yeah. We're obviously doing very very well in the market with our existing offer and as I said in the prepared remarks, it's really weird really see it as our minimum viable product and we've done so well with it but I'm specifically the G. Six and G. Seven you know what you're seeing if you can <unk> you can go look analytically at the underlying script date of what you're seeing is.
James Hollingshead: G. Seven is really doing well with new customer starts a lot of people are gonna be seven and you guys. In for this is probably corny, but you've heard me as a metaphor before about fishing. You know you know if you think of you think were out fishing in a stock bond upon has a lot of G. Six in it so I just got more and more G. Seven and it all the time and so you know we want to be.
James Hollingshead: And we, you know, we continue to have a plan to file with the FDA for that label extension in 24 hours, and we'll have Omnipod Go. And that gives you the whole coverage for people using insulin with type 2, all the way from I'm initiating basal insulin to I'm using intensive insulin. And so we'll have that full portfolio of products, and we'll have a very clear way to commercialize them in both primary care and in the endocrinology channel. So that's why I say I'm very excited about the commercial pilot with Omnipod Go. We are learning a ton, and it's going to make us, it's going to make us much better commercially as we get into that and get that full portfolio on the market. Our next question will come from the line of Steve Lichtman with Oppenheimer. Please go ahead.
James Hollingshead: Able to go out there and fish and both buns and proportionally G. Seven is a larger and larger part of the market and we Wanna. We Wanna have now I'm gonna mixed metaphors, we want that wind at our back of all the patients coming down the G. Seven we know the offer together if five G. Seven is going to be terrific and and drive a lot of growth for us just like <unk> when she success.
Speaker Change: This concludes our Q&A section I would like to turn the conference back again Ponting said.
Operator: Thank you. Hi Guys, as you start opening up the opportunity here for the Libre platform outside the U.S. and then in the U.S., can you give us your latest thoughts on the size of that opportunity? There are estimates on what that new opportunity set looks like. It would be great to get your latest color.
Speaker Change: Thank you everybody for joining us today, we are really excited to have delivered another outstanding year for insulin.
Operator: We're focused on extending our leading position with our deep expertise and strong emphasis on innovation operational excellence in further improving the customer experience.
Speaker Change: We remain committed to driving value for our shareholders through margin expansion in cash flow generation, all while maintaining our emphasis on investing for growth I also want to once again, thank our outstanding Insolent global team for their dedication in their focus on innovation and passion for our customers. Thank you everybody and with that all thank you all and wish you all a great evening.
James Hollingshead: Yeah, we think it's a really big opportunity. You know, if you look at the sensor market, you've got millions of people using Dexcom sensors and millions of people using Abbott sensors, you know, so the G6, G7 family products and the Libre 2 and Libre and now emerging Libre 3 family of products. And by creating the integration across that range, so you know, prioritizing G7, prioritizing Libre 2 plus, and then three that we're working in parallel, it opens up a really large, substantial market for us. The two, you know; we love working with both of our partners. They both have great technology. They're both really good partners. The development pathway with both of them is really strong. They're slightly, they have slightly different positions in the main geographies of the US and Europe in terms of their installed base, but both of them have very, very large installed bases.
Speaker Change: Goodnight everybody.
Speaker Change: Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may I'll disconnect.
James Hollingshead: [music].
James Hollingshead: And both of them have, as we've always said, CGM paves the road for us because people get used to having an on-body experience with a sensor, and it makes it much easier for them to then jump to an on-body experience with an Omnipod. And so, you know, we think it opens up, you can go look at the market shares, the estimated market shares for our two partners, but we think the Libre integrations open up a large installed base both in Europe and the US of people who will be ready for Omnipod because they're, they're used to an on-body CGM experience. Your next question will come from the line of Marie Thibeault with BTIG. Please go ahead. Hey, good afternoon. This is Sam Wong from Marie.
Operator: Thanks for taking the question. Maybe I can follow up on some of the Type 2 comments. And, you know, just looking at pivotal data coming up at ADA and then filing for a label expansion, how much of an uplift could that be once you do get the expanded label there, just considering, you know, 20-25% of new patients are already coming from Type 2. Thanks.
James Hollingshead: Thanks, Sam. If you just look at the size of the end markets there, and you know, I'll repeat the numbers that we shared before. In the US, there are about 1.6 million people living with type 1 diabetes, and that market is about something less than 40% penetrated with AID therapy. Then, in the type 2 market, there are somewhere between 3 and 4 million people living with type 2 who are on basal-only therapy, and somewhere around 2.5 million people living with type 2 in the US who need intensive insulin therapy, so basal plus bolivar.
James Hollingshead: Mmm Mmm.
James Hollingshead: Mmm.
James Hollingshead: [music].
James Hollingshead: Omnipod 5 is really aimed at that intensive insulin therapy population of about two and a half million people in the U.S., and therefore, it's a larger end market than Omnipod 5 plays in now with its current label. We know that that market is less than 5% penetrated with AID therapy, and we're already the market leader in that segment of the market because Omnipod Dash has a label there, and we know we're the clear market leader in space. So we're very optimistic. You know, Omnipod 5 is very easy to use and takes a lot of the burden off of managing your diabetes.
James Hollingshead: That's why it's been so successful in the Type 1 population, and we're very optimistic about that value proposition going into the intensive insulin-using Type 2 population, which is a larger end market than the one we're playing in today. So we think it is a really important opportunity. And a market that, by the way, will continue to grow over time.
James Hollingshead: We have time for one more question. Your final question comes from the line of Danielle Antalffy with UBS. Please go ahead.
Operator: Hey, good afternoon, guys. Thanks so much for squeezing me in and taking my question. Um, just a question on wholesaler stocking and that whole dynamic, because it is something, you know, now we have to start thinking about in the model, but, and I know it's unpredictable, but qualitatively, maybe you could talk about how much visibility you have into when that pod that gets stocked goes on to a patient, I guess, trying to get a sense of, you know, is this something that's going to happen at this level How long does the stocking sort of fit on the shelf there?
Operator: Mmm Mmm.
Operator: [music].
Lauren Budden: I don't know, I mean, it doesn't really... http://TheBusinessProfessor.com. It's a pretty efficient channel. In terms of visibility into the data on hand, that's not something that we ever include in our guidance. That's something that we can't control. And so, unfortunately, this quarter, we had the self-awareness of them taking the inventory level back up after they had taken it down earlier in the year. And then, at the same time, we had the ERP pull forward dynamic. So I don't expect that we'd see something of that magnitude. But again, when we have something like this, what we do is we call out, and we tell you when it happens. We don't have the ability to guide it because it's not something in our control.
Lauren Budden: Mmm.
Lauren Budden: [noise] Mmm Mmm Mmm.
Lauren Budden: Mmm Mmm.
Lauren Budden: [music].
Operator: And we do have time for one more question. That question will come from the line of Matt Miksic with Barclays. Please go ahead. Great. Thanks so much. So maybe a bit of a reporter, good news, and maybe challenging news question if I could just at the end. You had mentioned that you're looking for acceleration.
Operator: That goes on. And, I mean, given the new patient share that you're catching. Now, um... What's the, you know, very high growth, and it's a very high share of new patients, so what additional patients do you get with G7 that you're not already capturing? And the advantage he's going to be having. And then the other question is looking out of your 18 months or so.
Operator: Not certain, of course, but it certainly seems like there's going to be another two books on the market from one of your competitors, or more. And so maybe just think about your own, how do you think about that? How do you prepare for that?
James Hollingshead: I look forward to continuing your leadership in that segment, and how should we investors think about that affecting growth? Thanks, Matt. I'll do those in reverse order. The first one is on the tubeless form factor.
James Hollingshead: We obviously watch our competitor pipelines as closely as we can, and in terms of what is out there publicly that we can see, we don't see anything coming in that time frame that's even close to what we have on the market right now with Omni Platform. Just in terms of the whole package, the convenience, the ease of use, the scalability, the wear experience, you know, automated needle insertion, we could go on and on about the feature set, but we are very confident in our competitive position. We're never complacent. We have a lot of respect for our competitors, and we know that because Omnipod 5, Omnipod in general, but Omnipod 5 has been so successful, everybody wants to chase it. So that just makes sense, and that's how competition works.
James Hollingshead: Yeah.
James Hollingshead: [music].
James Hollingshead: Mmm.
James Hollingshead: [music].
James Hollingshead: Mmm.
James Hollingshead: But we are very confident in our competitive position, and we don't see anything coming in anybody's pipeline that even matches what we have, and we're going to continue to drive innovation. So we're going to extend our lead. On the first part of your question, it's a really good question.
James Hollingshead: Mmm.
James Hollingshead: Mmm Mmm Mmm Mmm.
Speaker Change: Mmm Mmm.
James Hollingshead: [music].
James Hollingshead: Yeah, we're obviously doing very, very well in the market with our existing offer. And as I said in the prepared remarks, it's really, we really see it as our minimum viable product. And we've done so well with it. But on specifically to G6 and G7, you know, what you're seeing, and it's, you know, it's, you can go look analytically at the underlying script data.
James Hollingshead:
James Hollingshead: What you're seeing is G7 is really doing well with new customer starts. There are a lot of people going on to G7. And you guys have heard me use this metaphor before about fishing. You know, you know, if you think of, if you think we're out fishing in a stocked pond, the pond has a lot of G6 in it, but it's got more and more G7 in it all the time. And so, you know, we want to be able to go out there and fish in both ponds.
James Hollingshead: And proportionally, the G7 is a larger and larger part of the market. And we want to, we want to have, now I'm going to mix metaphors. We want that wind at our back of all the patients coming into G7. We know the offer together, Omnipod 5 and G7, is going to be terrific and drive a lot of growth for us, just like Omnipod 5 with G6. This concludes our Q&A section. I would like to turn the conference back to James Hollingshead.
James Hollingshead: Thank you, everybody, for joining us today. We are really excited to have delivered another outstanding year for Insulet. We're focused on extending our leading position with our deep expertise and strong emphasis on innovation, operational excellence, and further improving the customer experience. We remain committed to driving value for our shareholders through margin expansion and cash flow generation, all while maintaining our emphasis on investing for growth.
Operator: I also want to once again thank our outstanding Insulet global team for their dedication and their focus on innovation and passion for our customers. Thank you, everybody. And with that, I'll thank you all and wish you all a great evening. Good night, everybody. Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.
Operator: Mmm.
Operator: Mmm.
Operator: [noise] Mmm Mmm Mmm Mmm.
Speaker Change: Mmm Mmm.
Operator: [music].