Q1 2024 DexCom Inc Earnings Call
Ladies and gentlemen, welcome to the decks Com first quarter 'twenty 'twenty four earnings release conference call.
Abby: My name is Abby and I will be your operator for today's call.
Abby: At this time all participants are in a listen only mode and later, we will conduct a question and answer session.
Abby: During the question and answer session. If you have a question. Please press star one on your Touchtone phone.
Speaker Change: As a reminder, the conference is being recorded.
Speaker Change: And I will now turn the call over to Sean Christensen, Vice President of Finance and Investor Relations. Mr. Christiansen you may begin.
Sean Christensen: Thank you Abby and welcome to <unk> first quarter 2024 earnings call. Our agenda begins with Kevin Sayer, <unk>, Chairman, President and CEO, who will summarize our recent highlights and ongoing strategic initiatives, followed by a financial review and outlook from Jeremy Sylvain, Our Chief Financial Officer.
Sean Christensen: Following our prepared remarks, we will open the call up for your questions at that time, we ask analysts to limit themselves to one question. So we can provide an opportunity for everyone participating today. Please note that there are also slides available related to our first quarter 2020 for performance on the <unk> Com Investor Relations website on the events and presentations page with that let's review our safe Harbor statement.
Sean Christensen: Some of the statements we will make in today's call may constitute forward looking statements. These statements reflect management's intentions beliefs and expectations about future events strategies competition products operating plans and performance. All forward looking statements included in this presentation are made as of the date hereof based on information currently available to <unk>.
Abby: <unk> com are subject to various risks and uncertainties and actual results could differ materially from those anticipated in the forward looking statements. The factors that could cause actual results to differ materially from those expressed or implied by any of these forward looking statements are detailed in <unk> annual report on Form 10-K, most recent quarterly report on Form 10-Q and other filings.
Abby: With the Securities and Exchange Commission, except as required by law, we assume no obligation to update any such forward looking statements. After the date of this presentation or to conform. These forward looking statements to actual results. Additionally, during the call we will discuss certain financial measures that have not been prepared in accordance with GAAP with respect to our non-GAAP and cash based results unless otherwise noted.
Abby: All references to financial metrics are presented on a non-GAAP basis. The presentation of this additional information should not be considered in isolation or as a substitute for results were superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and the slides accompanying our first quarter earnings presentation for a reconciliation of these measures to their most directly.
Abby: Comparable GAAP financial measure now I will turn it over to Kevin.
Kevin Ronald Sayer: Thank you Shawn and thank you everyone for joining US today, we reported another great quarter for <unk> com with first quarter organic revenue growth of 25% compared to the first quarter of 2023 demand for <unk> CGM remains very high as customers continue to recognize and value, our leading product performance and differentiated user.
Her experience while it has only been a year since the launch of <unk> seven in the U S. We have seen a significant shift in the landscape over that time, we've attracted tens of thousands of new prescribers to our ecosystem meaningfully improved our presence within primary care and experienced growing demand from people with diabetes, who are benefiting from Sigma.
Kevin Ronald Sayer: Difficult expansions in coverage over the last year much of this momentum can be directly attributed to our product performance and innovative features with the launch of G. Seven we'd extended our leadership in sensor accuracy and took a significant step forward and ease of use. We also introduced a new software ecosystem, which was designed to improve our user.
Kevin Ronald Sayer: Her experience and drive high levels of customer engagement and retention.
Accordingly, we have continued to enhance the G. Seven experience with ongoing improvements to both the hardware and software platforms. In fact, we've completed software updates almost monthly since the launch of G. Seven introducing new features upgrading performance in connectivity and most recently, establishing the ability to integrate insulin data into our app.
Abby: These are great examples of how our new software architecture enables much faster innovation, we are constantly working to advance the customer experience and reinforce decks com as the technology leader in this space along those lines. We were very excited to receive clearance by the FDA for our direct to watch feature for G. Seven in the first quarter.
Abby: This approval will allow our customers to use their Apple watch is a primary display rather than connecting through their mobile phone, providing even greater flexibility in how and where are they interact with their glucose data. This added to our long list of industry first as G. Seven is the first FDA cleared CGM that can communicate directly from sensor to watch.
Abby: To enable this we built a robust connectivity infrastructure into the design of <unk> seven with the ability to connect with three different Bluetooth devices at the same time, our customers can simultaneously connect to a phone a pump or a receiver and a watch decks com is the only CGM system that gives customers. These options we have.
Abby: Received great feedback since we launched our direct to watch software in the UK and Ireland and look forward to extending into additional markets. Shortly features like these add to our standing as the innovator in the CGM industry strengthening our sensor platform as global access and awareness continued to expand as a reminder, we recently crossed the one.
Abby: Year, Mark since the landmark CMS decision to expand coverage for all people are using insulin and certain non insulin using individuals' had struggle with hyperglycemia. This decision paved the way for greater commercial coverage for these populations further strengthening our position as the most covered CGM in the U S. It also serve to broaden our converse.
Abby: Patients with Payors wallpapers have long recognized ex <unk> ability to help titrate insulin. There is now a growing appreciation for our ability to drive better outcomes through behavior change and customer engagement.
Abby: There is also a growing awareness of these benefits in the clinical community with much broader coverage now available. Many physicians have started incorporating decks com CGM earlier into their customer care plans. They recognize lifestyle management as a cornerstone of the diabetes care and metabolic health landscapes, and see CGM as a core tool to drive behavior along.
Abby: <unk>, new drug therapies like G. L P ones to that point in the second quarter, we will be launching a medication logging module and activity integration tool within the G. Seven app to help those using decks com CGM with these therapies.
Abby: While this has helped us significantly expand our prescriber base over the past year, we are still only scratching the surface of the sizeable opportunity. There are over 200000 primary care physicians in the U S who treat tens of millions of people with diabetes. There remains a clear opportunity for us to deepen our presence within this channel as we worked.
Abby: Drive even greater care for their patients as a result, we announced an expansion of our sales force. This past quarter, we were blown away by the level of interest and the quality of talent that we were able to attract for these roles by the end of the first quarter. We had already completed our hiring and train. These new reps. This team is excited to hit the ground running and we look forward.
Abby: We're just seeing them build momentum over the course of the year as part of this initiative beginning in the second quarter. We are also taking steps to optimize the structure of our sales team to be most effective with our call points across the endocrinologists and primary care physicians as well as leading practitioners and maternal fetal medicine, we expect our new team in this hub.
Abby: <unk> structure to help us better capitalize on the significant opportunities ahead, along those lines, we hit another significant milestone in our company's history with the Fda's clearance of our newest product Stello. The first glucose biosensor approved for use without a prescription in the U S. Recognizing a significant unmet need for the <unk>.
Abby: <unk> 5 million people with type two diabetes, who are not on insulin or at risk of severe hypoglycemia. We developed cielo is a more tailored solution for this population and work closely with the F. D. A to simplify access to this product by removing the burden of a prescription we expect stello to draw broad interest from both the clinical community and directly for men.
Abby: And the diabetes community, who want to better understand their blood sugar in.
Abby: In our dialogue with the FDA it became clear that IC G. M accuracy remain critically important in establishing this new sensor category, both as a safety measure and to ensure that our customers are receiving reliable actionable information stellar will leverage the industry, leading accuracy of our G. Seven sensor hardware, while providing a custom software experience.
Abby: Some more directly meet the needs of those not taking insulin we're on track to launch Jello. This summer is a 15 day cash pay product and we'll continue to build our case with payers for broader coverage stellar will be fulfilled initial avi a brand new ecommerce website and available and onetime purchases our subscription models, we look forward to providing <unk>.
Abby: Greater detail SLO features including pricing immediately before lunch and we'll share further updates on our go to market strategy and ordering process at 88 and on our second quarter earnings call.
Abby: In our international business. We also advanced some key strategic initiatives. This past quarter in February we officially launched XCOM, one plus into a European markets, which is our first step in moving our entire <unk> product line into the G. Seven form factor this.
Abby: This transition brings several of the G. Seven technological benefits to this customer base such as the smaller form factor shorter warm up time and improved accuracy and further simplifies the prescribing process for physicians.
Abby: Moving to a shared hardware platform also benefits our cost structure over time as it allows us to drive greater volume to our G. Seven lines of more quickly reached scale.
Abby: We also completed our transition to a direct sales model in Japan, enabling us to begin commercial operations at the start of the second quarter. As a reminder, this is one of the only markets in the world with coverage for all people using insulin which represents over 1 million people. Despite this market penetration remains in its early stages and we see a <unk>.
Abby: Significant opportunity to drive greater uptake index Com CGM share as a result, we believe Japan could become a key growth driver for us over time as we strengthen our presence in this market in the coming quarters.
Abby: This is an incredibly exciting time for us there will be a lot to learn with the launch of sallow and we are thrilled to once again pioneer the CGM industry with a new subset of users. We look forward to sharing more updates with you as we begin this journey with that I will turn it over to Jeremy for a review of the first quarter financials Jeremy.
Jeremy: Thank you Kevin as a reminder, unless otherwise noted the financial metrics presented today will be discussed on a non-GAAP basis.
Jeremy: Reconciliations to GAAP can be found in today's earnings release as well as on our IR website.
Jereme M. Sylvain: For the first quarter of 2024, we reported worldwide revenue of $921 million compared to 741 million for the first quarter of 2023, representing growth of 24% on a reported basis and 25% on an organic basis. As a reminder, our definition of organic revenue excludes the impact.
Jeremy: A foreign exchange in addition to our non CGM revenue acquired or divested in the trailing 12 months.
Jeremy: U S revenue totaled 653 million for the first quarter compared to 526 million in the first quarter of 2023 representing growth of 24%.
Jeremy: Our recent momentum in the U S continued this quarter as we again benefited from the largest expansion of reimburse coverage in our company's history.
Jeremy: This led to another quarter of significant new customer demand in the U S and contributed to our record new start quarter globally.
Jeremy: As Kevin mentioned, we are excited to build on this momentum with our expanded sales force and look forward to seeing the new team ramp up in the months ahead.
Jeremy: International revenue grew 24% totaling $268 million in the first quarter.
Jeremy: International organic revenue growth was 26% for the first quarter.
Jeremy: We executed very well across our international footprint and again took market share this quarter benefiting from our targeted access expansion and product portfolio strategy, we delivered a particularly strong quarter in our core European markets, which more than offset the pause in growth from Japan as we finalized its transition to direct sales our first.
Jeremy: Gross profit was 569 million or 61.8% of revenue compared to 63, 4% of revenue in the first quarter of 2023.
Jeremy: This gross margin result was in line with our expectations as G. Seven continues to become a larger part of our product mix as a reminder, G. Seven carries a lower margin than <unk> today, but we expect this to change in the coming quarters as we drive more volume through our G. Seven lines in the U S and Malaysia.
Jeremy: Between continued G seven demand, our pump integrations and moving decks com one to the <unk> platform. We continue to see more of our base moving to the G seven form factor.
Jeremy: Operating expenses were $428 9 million for Q1 of 2024 compared to $391 2 million in Q1 of 2023.
Jeremy: This quarter was another demonstration of our ability to generate significant operating leverage as we grow in fact, we grew our revenue at more than double the rate of operating expenses in the first quarter, resulting in more than 600 basis points of opex leverage compared to the first quarter of 2023.
Jeremy: Operating income was $140 2 million or 15, 2% of revenue in the first quarter of 2024 compared to $78 6 million or 10, 6% of revenue in the same quarter of 2023, adjusted EBITDA was $220 9 million or 24% of revenue for the first quarter compared to 140.
Jeremy: $5 9 million or 19, 7% of revenue for the first quarter of 2023.
Jeremy: Net income for the first quarter was $128 2 million or <unk> 32 per share.
Jeremy: We remain in a great financial position closing the quarter with approximately $2 9 billion of cash and cash equivalents on the back of nearly doubling our free cash flow year over year. This.
Jeremy: This provides us significant flexibility to both support our organic growth opportunities and assess any strategic uses of capital.
Jeremy: From a capacity perspective, we remain in a great position with Malaysia quickly scaling and we are further diversifying our footprint with the build out of our Ireland facility.
Jeremy: This leaves us well positioned to support our near term growth opportunities, including the highly anticipated launch of Stello. This summer.
Jeremy: Turning to guidance, we are raising the midpoint of our revenue guidance with an updated range of 4.20 to 4.35 billion, representing organic growth of 17% to 21% for the year.
Jeremy: For margins, we are reaffirming our prior full year guidance of non-GAAP gross profit margin in a range of 63% to 64% non-GAAP operating margin of approximately 20% and adjusted EBITDA margin of approximately 29% with that we can open up the call for Q&A Sean.
Sean Christensen: Thank you Jeremy as a reminder, we ask our audience to limit themselves to only one question at this time and then reenter the queue if necessary Abby please provide the Q&A instructions.
Abby: Thank you.
Speaker Change: Pardon me, we will now begin the question and answer session. If you have a question. Please press star one on your Touchtone phone.
Jeremy: If you wish to be removed from the queue Press star one a second time.
Jeremy: If you are using a speakerphone. Please pick up the handset first before pressing the numbers and ensure that you are on mute.
Jeremy: Once again, if you have a question. Please press star one on your Touchtone phone.
Jeremy: And we will take our first question from Danielle <unk> with UBS. Your line is open.
Danielle: Hey, good afternoon, everyone. Thanks, so much for taking the question and congrats on a strong start to the year.
Jeremy: And so.
Jeremy: So this delaware.
Danielle: The counter clearance with obviously one of the most exciting things that we saw in the first quarter can you help us understand how you think the OTC label expand your addressable market and how you're <unk>.
Danielle: Aligning the new sales team to capitalize.
Speaker Change: Well. Thank you for the question and it's been every bit as exciting for us as there has been as you can imagine Danielle we have had more media impressions in inquiries and buzz about stello from the outside than really anything we've ever done and it's been spectacular.
Speaker Change: And we're very excited for it.
Speaker Change: The way it expands our access and as we thought through this you know there is 25 million people with type two diabetes, who are not on insulin or who don't suffer from severe hyperglycemia.
Speaker Change: We wanted to get that product out quickly and make it very accessible to them.
Speaker Change: We studied this we spent a lot of time thinking about it the best way to do that is to eliminate the prescription process and not to have to have them in the middle of that with physicians and that's also helpful for their health care providers, because they don't have to call the pharmacy and do prescriptions as well so the key to this in particularly in getting to a lot of people is to make this very easy to obtain.
Speaker Change: <unk>.
Speaker Change: And that's why we went over the counter with it at the same time as I said in my remarks, we're thrilled with the labeling and the fact that we still have CGM controls around this sensor by going over the counter we didn't just sell the floodgates for everybody to come in you still have to have an incredibly good product to go do something like this so we think we have a very very good advantage there.
Speaker Change: With respect to our sales expansion you know I've made a couple of comments about the expansion and positioning the sales force. We know for a fact that when we have coverage in the physician arena when we call on doctors, we do extremely well.
Speaker Change: And so as we repositioned our sales force I talked about a.
Speaker Change: Repositioning between endocrinology primary care and.
Speaker Change: And and also the.
Speaker Change: The maternal and fetal medicine.
Speaker Change: Markets as well, we've repositioned our group whereby our Oh, we have specialists, who spend more time in the endocrinology offices.
Speaker Change: And with hybrid scrubbers, not so much with those who don't prescribe a lot and a lot of the new adds a lot of the expansion relates to primary care or where they will talk about Stella with primary care doctors, who see almost all of the type two patients who are arent on insulin. So by expanding this way we believe we'll be able to have more coverage with physicians as well.
Speaker Change: And so they will take that message out and talk with the doctors as well, but this will also be a message driven direct to consumer.
Speaker Change: And the same way that you see all the other type two products go on Jeremy you might have a bit to add to that too you asked the question a little bit of the sales force and Kevin certainly pointed to Stello as a big part of the sales force and expanding the Tam and so one of the reasons to expanded exactly as Kevin said there is a massive opportunity. There. However, there is also a massive opportunity in our existing markets.
Speaker Change: <unk> seven is a wonderful product <unk> is a wonderful product theres coverage continuing to expand as well in those categories and so expanding the sales force also allows us to cover more in that category and that quarter category continues to do incredibly well, we had a record new patient quarter this quarter.
Speaker Change: And so you can expect to see really growth on both ends of that as a result of the expansion of that sales force.
Speaker Change: We will take our next question from Robbie Marcus with Jpmorgan. Your line is open.
Robert Justin Marcus: Oh, great. Thanks for taking my question and congrats on a nice quarter.
Robert Justin Marcus: I wanted to talk about the.
Robert Justin Marcus: The leverage we saw it down the P&L I was pretty impressive.
Robert Justin Marcus: Will it be by.
Robert Justin Marcus: Like 150 bps on operating margin.
Robert Justin Marcus: So just wanted to see how we should think about.
Robert Justin Marcus: Gross margin progression operating margin progression throughout the year I saw the reiterated guidance, but just trying to think about cadence, especially in light of the Stello Lana Chen.
Speaker Change: The key drivers of that upside in the quarter and how we should think about that moving through the year. Thanks a lot.
Speaker Change: Yeah sure Robbie Thanks for the question.
Speaker Change: The way to think about gross margin and you know as that of course over the course of the or we talked to them. When we set guidance that this was going to look a little bit like a more typical year and in a more typical year, you generally see $3 to 400 basis points of expansion over the course of the year and that's what I'd expect to see over the course of this year a lot happened last year with.
Speaker Change: The transition from <unk> six to <unk> seven it's not a typical year, we had a new manufacturing.
Speaker Change: Facility coming online, but as you kind of go back into years prior to that you see that sort of cadence that's how we're thinking about it.
Speaker Change: Over the course of the year.
Speaker Change: Right now and so that gives you some context for that cadence from an op margin perspective or at least an opex spend perspective.
Speaker Change: We've already made the investment in the sales force and so that you see playing through in the first quarter and to your point you saw some some nice leverage in the first quarter, we will be making investments further investments in Japan here as we go live in the second quarter and that will play out over the course of the year and then obviously associated with the launch of Stello over the course of the summer we will be making investments.
Speaker Change: There so we while we won't get the same leverage that you ultimately saw in the first quarter over the balance of the year you should expect some leverage over the course of the year.
Speaker Change: And that ultimately contributes down to what you'd see is an expansion of op margin. Despite our gross margin guide that's about a bit of a click back from the prior year. So that's the way to think about it in terms of the old performance in the Q1, I think you're alluding to the beat in terms of.
Speaker Change: Margin I think the takeaway here is it's a good encouraging sign for US we've demonstrated over the past few years, we can drive leverage into this business. This year is no exception all of the efforts that we've been talking about in prior years continue.
Speaker Change: However, it's a little early to change how we're thinking about the full year first quarter. As you mentioned nice start to the first quarter and we'll keep you updated on progress as the year progresses.
Speaker Change: Okay.
Speaker Change: And we will take our next question from Larry <unk> with Wells Fargo. Your line is open.
Larry: Good afternoon, and thanks for taking the question.
Larry: Kevin I'd love to ask about Stello. So I heard your comments about E. Commerce website, why why an e-commerce website as opposed to pharmacies and retail.
Kevin Ronald Sayer: Yeah, I'll talk about how you see utilization playing out and I know the indications only for type two oral patients.
Kevin Ronald Sayer: But do you see an opportunity beyond type two oral patients such as pre diabetes and health conscious people maybe down the road. Thanks for taking the question.
Kevin Ronald Sayer: I'll start with the end and go back to the website and that product is labeled for people not on insulin and its not necessarily labeled just for people with diabetes. We designed the experience to focus more on those with type two diabetes, because we believe theres, a very very strong unmet need and a product tailored to that solution. We think can do.
Kevin Ronald Sayer: Well, we believe people will be interested who don't have diabetes and will impact us and it will purchase it but the focus out of the gate is in this marketplace, where people have a direct need over time, we definitely see this platform and features in our software migrating towards those other markets. We just wanted to get started here first with respect to the website and the <unk>.
Kevin Ronald Sayer: Isn't we've gone with this direct distribution model, we've had great success with launching products and some of the international markets as we roll decks com one out so we do know how to do this second of all we want a little bit of control when the launch when we start we want to understand what's going on and we want to track utilization patterns. We wanted to see how this goes and we felt this was the most efficient way to do it.
Kevin Ronald Sayer: And as you go back to my comments I said initially we will launch in this in this program I think as this gets bigger we'll seek other distribution channels. If it's more efficient to get more product to people. We are very well positioned and we've done a lot of work setting this website up.
Kevin Ronald Sayer: And then the distribution process will be extremely efficient so were not concerned about being overrun right now we're at a really good position to get this product to the people that want it through the web site that we've set up.
Speaker Change: And then to your question on utilization, Larry It's gonna be a little bit of everything I think theres going to be some users that do use it full time I think some folks will use it intermittently.
Kevin Ronald Sayer: You know that based on our on our market research our market researches basically is for the most part indicated once folks around this product they want to use it and I think we've run studies, where there was a high either utilization while in studying the high request to continue utilization post study that'll being said as we think about modeling we want to make sure. We're prudent in doing so and so we have a variety.
Kevin Ronald Sayer: Utilization patterns that will ultimately put out there. So I think expect a little bit of everything that population is so big you'll get I think a grab bag of everything Fortunately, we always are surprised to the positive on how often folks want to wear these zones.
Larry: We will take our next question from Joanne Wuensch with Citibank. Your line is open.
Joanne Karen Wuensch: Thank you very much for calling into question.
Joanne Karen Wuensch: That's in the quarter.
Joanne Karen Wuensch: With a 15 day stello out in the market what are the steps to bringing a 15 day center onto the <unk> platform and what are the economics of moving to that.
Speaker Change: Timeframe. Thank you.
Joanne Karen Wuensch: Yeah first of all there won't be any G 615 day, we're not going to spend any more money on June six I can I can assure you of that one of the reasons why we're launching so with 15 days in our current G. Seven platform has to learn as performance in this type of environment as we've talked earlier, we have a level of performance reliability and expectation.
Joanne Karen Wuensch: <unk> of our customers, we wanted to make sure we deliver those.
Joanne Karen Wuensch: Felt more comfortable at 10 days to start we have numerous clinical efforts and R&D efforts to move the platform to 15 days for all the G. Seven.
Joanne Karen Wuensch: Product and including the <unk>, one plus and our international markets at some point in time as we've said in our guidance and what we've done that scientists a patent for 'twenty 'twenty four but it certainly anticipated not long after that so you'll hear and see more about that over time. The economics are quite simple year selling two sensors over 30.
Joanne Karen Wuensch: Day period, rather than three so we can see a significant margin.
Joanne Karen Wuensch: Pick up as long as we have the proper reliability on the other side because of your shipping a sensor in a Fedex box to replace one that doesn't work you've lost all your ear economies of scale anyway. So we're not only looking at 15 days, making a reliable we're looking very hard at offering the maximum most efficient customer experience for individuals.
Joanne Karen Wuensch: When we go to 15 days so they are ready and so this delivers what we've always delivered because one of our and our CE sat scores and as we survey our customers one of the things that we always hear about.
Joanne Karen Wuensch: Is how much people value that experience and the support that we give them. So it's a combination of all those things, but scientifically we're well down the road, having 17 day product.
Joanne Karen Wuensch: We will take our next question from Jeff Johnson with Baird. Your line is open.
Jeffrey D. Johnson: Thank you good afternoon guys.
Jeffrey D. Johnson: That's on the quarter. So wanted to ask on basal just any visibility you can give on how that's been scaling obviously a record new start.
Jeffrey D. Johnson: This quarter I would assume Basil is contributing nicely to that but one of the sequential patterns look like the last few quarters is it still a sequentially growing it at a pretty healthy rate I understand but any color you can provide there.
Jeffrey D. Johnson: Also there's been some debate obviously.
Jeffrey D. Johnson: Market share within the basal population here in the U S. Just love kind of any insight you can provide on that front as well.
Speaker Change: Yeah sure I can take that one thanks, Jess I think when we talked about what we expected. This year, we really talked about it in the context of basal adoption across the entire population and we talked about exiting the year right around that 15% adoption across the basal population in the U S in the year.
Speaker Change: Moving over the course of the year to 23% so about eight points of penetration.
Jess: So far through the first quarter things are going as we expected record new patients I think helps.
Forest: Forest that and you are correct a good chunk of our new patients are coming through that basal channel and we continue to see.
Jess: Really well performance in that category so.
Jess: Qualitatively the things we talked about the excitement in that channel those still remain in terms of share taking and how how we look at that category. We get script data, we look at script data based on pathology.
Speaker Change: The debate there is no debate internally to us we know we're taking share.
Speaker Change: And we see that data and I think a lot of you guys see that data so for what it's worth that data is out there you can see.
Speaker Change: Scripps continuing to come our way.
Speaker Change: For the purpose, we talked about when we have coverage when we compete head to head we've typically one.
Speaker Change: So I think.
Speaker Change: We we can we maybe disagree with some comments out there.
Speaker Change: But I think.
Speaker Change: The data is clear when you look at the script data I think it'll continue to demonstrate where this is going overtime hope that helps.
Speaker Change: We will take our next question from Jason Bedford with Raymond James Your line is open.
Jayson Tyler Bedford: Good afternoon, Thanks, just on Stello.
Jayson Tyler Bedford: Kevin you mentioned getting it out quickly, but you are not launching until the summer.
Jayson Tyler Bedford: Certainly don't mean to be impatient, but just outside of.
Jayson Tyler Bedford: The sales force training, maybe the e-commerce setup, what else are you doing to prep for the launch and then just does the FDA need to approve anything else I'm thinking of.
Jayson Tyler Bedford: <unk> or the like before you launch.
Kevin Ronald Sayer: No we have full FDA approval for launch it has been our experience or over time at <unk> com when we get a very rapid approval, we tend to become very impatient and we launch very quickly.
Kevin Ronald Sayer: And we've from time to time actually put ourselves in a bind by going out as quickly as we have we had a launch plan for this product anticipating an FDA approval when it was going to come and we're going to stick to the launch plan that we have we have manufacturing schedule that we have line setup. We have malls, we have everything packaging everything that we need ready to go but we're going to stick to the plan that we.
Jayson Tyler Bedford: We believe our timing is good and Theres no need to rush anything and so we're sticking to what we have and we're comfortable with it.
Jayson Tyler Bedford: We will take our next question from Margaret Andrew with William Blair. Your line is open.
Malgorzata Maria Kaczor Andrew: Hey, good afternoon, guys. Thanks for taking the questions.
Malgorzata Maria Kaczor Andrew: I wanted to hit on something Kevin I think you had said earlier in your commentary that you are seeing growing coverage and plans for patients earlier in their care. So I just wanted to know if you're referencing.
Speaker Change: Obviously, we've heard about.
Speaker Change: One is fun for me to add.
Speaker Change: Non diabetics, maybe things that are less traditional or the street thinks about that.
Speaker Change: And then y.
Jayson Tyler Bedford: And then as it relates to fellow obviously with that.
Jayson Tyler Bedford: But just any sense of the number of people that have proactively reached out on your website right now to buy the product line.
Speaker Change: Well, we havent anybody reach out to buy it because we have an offering for sale, but we certainly have a lot of inquiries and again as you go into media impressions articles interviews.
Speaker Change: And so is it the stuff things like that Cielo has been the biggest offering that we've had as far as news and as our reps walk into primary care Doctor offices I just spent a bunch of time with several of our our field team members. That's the question the minute they walk in the door one of them I guess, he's tello <unk> and when I was in.
Speaker Change: At AT&T data was interesting many of the physicians came up to me and said how does stello affect me and my practice. So there is a lot of interest.
Jayson Tyler Bedford: And there is a lot of buzz on that as far as using CGM earlier in treatment.
Jayson Tyler Bedford: We're certainly seeing that with basal or saying that as somebody goes on basal insulin luckier golan basal insulin <unk>.
Jayson Tyler Bedford: Just as one use of censored I know how this is affecting your body. So you can learn and so we can titrate your basal once all the way it needs to be and we're looking at probably.
Jayson Tyler Bedford: Product offerings and software enhancements to make that experience better, but even in the type one population Margaret you now see kids leave the hospital with their at Exco.
Jayson Tyler Bedford: They they they get diagnosed they go to the hospital and I and again I talk with someone this morning even.
Jayson Tyler Bedford: The six year of $6 is diagnosed and length of hospital worrying at X com, because there's no way that.
Jayson Tyler Bedford: They were told they can manage this disease without it so we have definitely become a.
Jayson Tyler Bedford: Our product offering that comes into play very very quickly I also think we see particularly if theres coverage at seven even in type two diabetes, who started using insulin physician patient and get them they'll get it to them and use that as a teaching aid as a tool to help these people manage their condition across the board.
Jayson Tyler Bedford: CGM is becoming used earlier in treatment over and over again, yes. Margaret. This is one of the reasons why when we last year, we think we talked a little bit about this is we introduced a cash pay option on our G series.
Speaker Change: One of the reasons and doing so is as Kevin alluded to are really across the spectrum of managing your diabetes, there's been more interest and so those plans that you have pockets that do cover everybody with diabetes and the cash pay option have there has been some uptake there is certainly not a majority of our uptake and certainly not.
Speaker Change: The materiality of our customer base, but the interest is there and so you continue to see that taking place. It's why we're so bullish on stello back to Kevin's point why theres. So much inbound interest in that product. So hopefully that gives you. Some context. There is a groundswell of attention to this and rightfully. So it can help a lot of people.
Speaker Change: And we will take our next question from Matt Taylor with Jefferies. Your line is open.
Matthew Charles Taylor: Hi, Thank you for taking the question.
Matthew Charles Taylor: I wanted to ask you.
Matthew Charles Taylor: Kind of a combined question when you were talking about moving earlier in the treatment paradigm and also with fellow coming on it and obviously you've got plans to try to broaden coverage and are having these conversations with payers about how that may benefit patients. So the questions really.
Matthew Charles Taylor: Are you seeing signs from the payers that you could actually get coverage for the G series <unk> for Stello in some other format. This year you know basically earlier in the treatment paradigm than basal and how long do you think it will take to get any kind of coverage efficiently for them.
Matthew Charles Taylor: Yeah.
Speaker Change: Yes, so it's a it's a fair question there are some plans out there that actually do cover.
Matthew Charles Taylor: Really all folks with diabetes not a majority of plans, but these plans have seen early on the value of CGM as a lifestyle change a preventative tool.
Matthew Charles Taylor: And something that ultimately yields results back to the system and at the same economics, we've talked to you about.
Matthew Charles Taylor: Before and so some plans have done that again, it's not the majority.
Matthew Charles Taylor: In terms of your question, though more broad coverage or how do we how do we introduce that earlier I don't think we expect that to expand significantly. This year certainly plan by plan you get wins here and there, but those are the majority of the national Formularies at this point and so I think the work has to continue to take place I think one of.
Matthew Charles Taylor: The reasons why we did want to get Stello out there is because the data that's going to come off in addition to all the clinical trials that are underway. The clinical work that's underway that we consistently do along with our <unk>.
Matthew Charles Taylor: Partner organizations, having that real world data I think will be really helpful. And then demonstrating to payers and employers why this is a good tool to ultimately improve health and reduce costs at the end of the day. So I don't expect it in 2024, if you asked us for the timeline Kevin has been very clear that two to three year window, we think it takes to.
Matthew Charles Taylor: Do so we're highly incentivized to go quickly.
Matthew Charles Taylor: Nevertheless, it's something we'll continue to work on and keep you posted on our progress as we make progress.
Matthew Charles Taylor: We will take our next question from Mathew Blackman with Stifel. Your line is open.
Mathew Justin Blackman: Hi, Good afternoon, everybody can you hear me okay.
Matthew Charles Taylor: Yep.
Mathew Justin Blackman: Okay, Great maybe Jeremy this question for you I know youre not going to give any precision here, but I'll ask anyway, just on <unk>, where we're already even in a rough sense in terms of the mix of the installed base and I guess the more important question is what's the tipping point.
Jereme M. Sylvain: For gross margin accretion in terms of G. Seven mix is that something we hit this year is that part of the the quarter over quarter potential improvement to get you to that.
Mathew Justin Blackman: Full year guide.
Mathew Justin Blackman: Or is that something that happens further out.
Jereme M. Sylvain: And as the AIB integration a key component.
Mathew Justin Blackman: That ramp.
Speaker Change: Yeah. So it's here.
Speaker Change: Here's my expectations the way, we're tracking and again, it's going to depend on.
Speaker Change: How things play out over the course of the year, but we are tracking to a point where G. Seven as a percentage of our overall sales will eventually move ahead of G. Six and I expect that here over the coming quarters. In 2024, so that is moving and it's really started to it started moving obviously the back half of last year and having some of that to your point the a.
Speaker Change: Integration was very helpful for the base. So that is happening and it is the reason for some of the leverage in the back half of the year as G. Seven starts to be the primary product that the economies of scale start to kick in and that's where you start to see the costs come below <unk> six and so that that could happen this year, it very well could.
Speaker Change: [noise] happen as we move over there it's going to depend on what at the velocity at which we move I will tell you Q1 was a very strong velocity and movement in.
Speaker Change: In terms of new patients coming in and I think you guys can see it in the Scripps a majority of new patients are already moving to <unk> seven so the great news its not a matter of if it's when and Thats really on converting that base. So I think the long long way to answer yes. Some of the leverage this year in gross margin is because we do expect <unk> to be the.
Matthew Charles Taylor: Alrighty a product when it gets lower it's going to be kind of the timing thing. We don't have an exact date, but at the velocity, we're going it's happening very quickly and it should be a good guy and he will play a large part of it it's already started with our tandem base I know, we're talking about insulet coming up here pretty soon.
Matthew Charles Taylor: Excited about both of those opportunities and converting that base.
Unknown Attendee: We will take our next question from <unk> Singh with RBC. Your line is open.
Unknown Attendee: Great. Thank you so much so U S growth was pretty strong at 24% year over year, but it was just in line with expectations and so I'm wondering if you can elaborate on pricing and I know that's been a big focus for you guys.
Harpreet Singh: What are the trends year over year and sequentially and then on Stello pricing is it fair to assume more in line with casually base similar to what your competitor has indicated thank you.
Speaker Change: There's still a pricing I'll start with and then Jeremy can can jump into any other seller pricing is going to be competitive. We've got a number of models. We're considering we said we'd bring you more information on that on the next call. It 80, a and that's when you'll hear more but we'll be very competitive with other cash offerings home hemo.
Harpreet Singh: Hello.
Jereme M. Sylvain: And then to your question on Q1 in terms of pricing dynamics, the pricing dynamics are stable.
Jereme M. Sylvain: Don't have a lot of contracts year over year that are changing.
Jereme M. Sylvain: And when we do have those contracts in general the pricing headwinds, we do have that typical medical device headwind Thats continued to play out so that is stable. The one thing you do see.
Jereme M. Sylvain: You know as you get into the start of a year and benefits reset is we did we do see a lot of our new patients coming through the pharmacy channel. We still have a very strong <unk> business and certainly the <unk> business continues.
Matthew Charles Taylor: To be supported by our partners very very well, but what we find is as we call on more and more primary care physicians, who are seeing where basal patients are seen there is a bit of a heavier tilt towards the pharmacy channel for new patients again the base. The base is pretty stable. So what you do find is as you think about the mix.
Matthew Charles Taylor: You do get a little bit more running through that channel given where the predominance of our new patients are coming from I don't forget we don't call that price, it's pretty consistent year over year, but it is helpful to understand those dynamics, it's not anything new but it's something just to continue to be mindful of as we move into a new year.
Matthew Charles Taylor: Okay.
Matthew Charles Taylor: We will take our next question from Matthew O'brien with Piper Sandler Your line is open.
Matthew O'brien: Afternoon. Thanks for taking my question and Jeremy It sounds like you're a little bit of a cold. So if you feel better.
Matthew O'brien: Sure.
Matthew O'brien: When I look at the stock and the aftermarket is down about 8% you just had your easiest comp of the quarter of the year I'm sorry.
Speaker Change: And then the rest of the year just assumes a pretty nice acceleration throughout the course of the year off with tougher comps even when you do it onto your stack basis. It's still it's still more than you just put up in Q1, I know, Japan is going to be a little bit of a tailwind you've got them marked a broader sales force now, but those guys take time to kick in stellar is not going to really kick in until Q3.
Matthew O'brien: <unk>, probably more like Q4, so just why the confidence in being able to hit kind of the midpoint of the guidance range for the remainder of the year.
Matthew O'brien: Just given some of these dynamics.
Speaker Change: Yeah sure I'm happy to happy to provide that Matt and thanks for the wishes on the call that was trying to impress you with my deep ways I guess that didn't work.
Speaker Change: In terms of in terms of how the confidence on the year.
Speaker Change: One of the things that as we go into a quarter, we try to set a base case and in the base case has risks around things like competitors things like adult adoption in the basal base things like what we would do in terms of channel mix and pricing internationally expansion and while we said Japan was going.
Speaker Change: To launch you have to be mindful of that.
Speaker Change: Talking about basal coverage and adoption outside the U S. All of those go into.
Speaker Change: As he set ranges for base cases, and as some of those getting knocked down we.
Speaker Change: We feel much more confident about raising the base case and so that's the reason why we ultimately did it we feel more confident in the base case as a floor and so we certainly felt good there we are.
Speaker Change: <unk> talked about it yet, but I think one of the things. We are really excited about is in France.
Speaker Change: Submitted our final paper work for <unk> called <unk> plus to launch with what we expect is basal coverage in the coming months and so we talked about it it was something we thought was coming.
Speaker Change: We knew was coming but it was one of those things that we needed to make sure. We did the appropriate steps and so as we start to Derisk if thats one thing.
Speaker Change: In Germany, we have wonderful basal coverage there. So it's a wonderful for the small population that has agreed to it.
Speaker Change: But that's a wonderful start for us in terms of now, saying well there is a pocket of payers in Germany, albeit small that do have basal coverage, it's a wonderful.
Speaker Change: Wonderful progression progression for us and we are the leader in terms of basal coverage in Germany right now and so these are the things that helped derisk the year and that hopefully give you guys a little bit more confidence in that base case, certainly it gives us confidence in that base case, and that's why when we come out and feel comfortable moving that up it's that confidence that we have in.
Speaker Change: That base case.
Speaker Change: And we will take our next question from Marie Thibault with BT IAG. Your line is open.
Marie Yoko Thibault: Good evening, Thanks for taking the questions I wanted to ask a question here on Japan. It certainly sounds like you have really broad.
Marie Yoko Thibault: Favorable coverage for all people with using insulin.
Marie Yoko Thibault: I want to understand you know where it was penetration into that market, whether you're a distributor partner.
Marie Yoko Thibault: What have been the barrier Sam what what has really been the hurdles and what do you are you going to do to try to.
Marie Yoko Thibault: Okay.
Marie Yoko Thibault: Our penetration with our partner was next.
Marie Yoko Thibault: Various barrier very small Japan has not been a big market for us in spite of the great coverage that has just come out which is why we've gone direct in our distributor partner as I've gone our separate ways.
Marie Yoko Thibault: We've had this experience in several geographies over the years in those geographies, where we acquired a distributor and an existing infrastructure like we did in Australia like we.
Marie Yoko Thibault: It did many years ago in Germany, we get out of the gate very quickly and we can grow our market very fast because we have an infrastructure already in place with respect to Japan, it's like some of the other geographies, we're starting from scratch similar to OE.
Marie Yoko Thibault: Yeah, well like we're doing in France. For example, we're starting from scratch in France on our own it will take us a while to build that growth engine and build that dynamic in Japan.
Marie Yoko Thibault: What held us back more than anything else is we just didn't have enough infrastructure and in all fairness, our distributor did well that's most important for their business and their own mines.
Speaker Change: And there wasn't that commitment.
Speaker Change: Drive there there will be that can be ready to drive going forward, but it's going to take a while to build it it's not going to happen overnight.
Speaker Change: Where we were very confident we've hired a team that can develop the relationships necessary, Japan is very much a market driven by physician and hospital decisions.
Speaker Change: We've got certainly from a leadership perspective, a team that can build those relationships and do the things that they need to do because it can take a little while as I as I'm talking to you.
Speaker Change: Looking to use hears from now I have every expectation that it can be a very large market for us, but we'll be very successful there.
Speaker Change: And we will take our next question from Bill <unk> with Canaccord Genuity. Your line is open.
Bill: Great. Thanks for taking my questions.
Bill: Just I was wondering.
Bill: Wondering if you could just comment on attrition rates reorder rates.
Bill: What have you seen with the transition to G. Seven from GE six and then how do we think about this in the different patient populations as we get out of the I 80 patients and into the basal hypo and then eventually in non using.
Speaker Change: Yeah. It's a it's a question we've asked ourselves quite a bit so happy to give you our thoughts on it.
Speaker Change: From <unk> six to <unk> seven we've seen a relatively consistent rate.
Speaker Change: There hasn't been much of a change in terms of retention utilization across those two products and that's expected as we upgrade folks.
Speaker Change: From one to the other arm.
Speaker Change: Obviously, we think the G. Seven experience is wonderful, but so is the <unk> experience and we pride ourselves on the experiences that we offer.
Speaker Change: So that's been relatively consistent what we've also found to date and I think it's important to start to date is that there isn't really had much of a difference in the populations. We've served across our across those folks on our products today, we find that there's only really one category, where retention and utilization is markedly different and it's those on AI systems.
Speaker Change: Everybody else seems to follow a pretty similar pattern of retention and utilization and I say that to date, because we are moving into new populations. We are moving more into basal we are moving it more into non insulin using populations, albeit still a smaller part of our user base.
Speaker Change: And the hypothesis has always been we expect a high utilization in those spaces. We've always been positively surprised but we are aware that as you move down the acuity curve. There is the potential opportunity for folks to use it may be a little bit less that being said, we haven't seen it to date, but we'll keep you posted as we're moving through what we're seeing so the help you guys kind of get your arms around it.
Speaker Change: Kevin Yeah, and I would add as we head into non intensive insulin therapy, we think there could be a number of outcomes here and there can be a number of use cases for people one of the reasons to maintain our distribution on our own website.
Speaker Change: Art with us to begin to understand those patterns and to understand what the purchasing patterns. How many people prefer the subscription model versus individual one time purchases and how often do they come back and then use our tools to find out what the experience was like what they like and what they did and the other thing I would add with respect to retention and attrition one of.
Speaker Change: Our biggest barriers, particularly back in the day was the co pays in the first quarter when everybody was in the <unk> World now that we have pharmacy coverage that barrier has been eliminated a bit and that's not as big a reason as to why we lose a customer at this point in time as it used to be in the past we've been very successful in working that dynamic.
Speaker Change: The flip side is our <unk> patients have very strong retention rates and very strong utilization patterns because of the attention are fine distributors pay to them. So it's a mix of everything bill, but I think we're in a good spot we will learn in the non intensive insulin therapy world and figure out how to build product offerings that maximize our experience.
Speaker Change: With those users.
Speaker Change: And we will take our next question from Michael <unk> with Wolfe Research. Your line is open.
Michael: Good afternoon, I wanted to ask on one of your Salesforce comments, Kevin I heard about the expansion faster and higher quality talent unexpected those folks are hitting the street in <unk> I got that I also heard about.
Michael: Our new team upgraded structure and it didnt quite follow what Youre doing there and why it's impactful. So if you could unpack that update for me I'd appreciate it. Thank you.
Kevin Ronald Sayer: Yeah, as we looked out over what we needed to accomplish and where we where we needed more emphasis in the field. There are a couple of things happen number one we realized as we had our reps who are calling on high prescribers also calling on a number of people who werent prescribers are doing a bunch of you know.
Speaker Change: Going and finding new prescribers that we may not be paying enough attention to our high prescribers and so as we've set things up we do have a set of folks who spend more time in the endocrinology and high prescribing Diabetologist World then with primary care at the same time, we needed people to call on more primary care physicians consistently we have learned.
Speaker Change: Over and over again that when we call on people we win.
Speaker Change: And so we need to call on more folks get more people out there we've been much more aggressive whether sampling program over the past several months, we need to get samples to more individuals we need to knock on more doors and have more relationships.
Speaker Change: Element that is education as we get to some of these offices, where we have somebody who's only written two or three CGM Scripps we've always had a certainly.
Speaker Change: Some account managers, who are regional people use to help train patients. If they don't have diaper training in the office, we made a little more investment there and then last there are many doctors, particularly as we get to slow and as we get more into the primary care World, who may not even see a ramp and so we do have them.
Speaker Change: More of an internal sales force.
Speaker Change: And again on a regional basis to do more of that work. So we're trying to go broader and deeper at the same time deeper with our high prescribers in the endocrinology World and then broader across all aspects of primary care, including training and supporting patients.
Speaker Change: We will take our next question from Steve Lichtman with Oppenheimer. Your line is open.
Steven Michael Lichtman: Thank you evening guys.
Steven Michael Lichtman: Want to ask about the non insulin hyper at risk group, which obviously does have coverage now.
Steven Michael Lichtman: <unk> estimated before is about the same size as Basil.
Steven Michael Lichtman: Are the sales force expansion and moves you're making that you just alluded to Kevin in the commercial organization, helping with those education efforts.
Speaker Change: Any updates overall, you can provide on sort of where you're at sort of tapping this opportunity would be great.
Speaker Change: Yeah.
Kevin Ronald Sayer: Thanks for the question you're right, it's a big opportunity for us, but it is one that has taken a little bit more time, obviously the focus is on basal it's a known quantity, but the the.
Kevin Ronald Sayer: The hypoglycemia.
Speaker Change: Awareness or the severe hypoglycemia event I should say.
Speaker Change: Those those are harder to educate folks and so to your 0.1 of the things that we've done and Terry and her team have really focused on is really creating the educational materials and then arming the salesforce accordingly to get out there and so if you have a situation, where we are expanding our sales force and reaching broader and touch points, where a lot of these.
Speaker Change: Folks are seat right theyre seeing really across the gamut of the health care spectrum that expansion does allow us to get out there and educate more but the biggest challenge is the education. It doesn't come to top of mind for individuals and prescribers that when this event takes place I qualify and Thats just a more work we're going to have to continue to do.
Speaker Change: On education again, more touch points, a good thing and the team is working hard at that.
Speaker Change: We will take our next question from Josh Jennings with TD Cowen Your line is open.
Joshua Thomas Jennings: Hi, good afternoon. Thanks for taking the questions. Kevin you mentioned that you'll have numerous iterations of stellar over the course of the first 24 months of launch.
Joshua Thomas Jennings: And I wanted to just see if there's any any other color you can provide on those iterations and they're mostly going to be on the software side or.
Joshua Thomas Jennings: As one of these the iteration is going to be an increase in the rate of sensors lasting the full 15 days and how important is that expansion to the success of Stella. Thanks, So much.
Joshua Thomas Jennings: Well, we always work on sensor performance optimization, and we have a very very strong program on that across the board and the seller was on the G. Seven platforms. So anything we do at G. Seven certainly can apply to stello with respect to changes that we make I think I can go back to what I said about G. Seven we've literally had a software iteration every month.
Speaker Change: Since we launched <unk> seven and we brought several new.
Speaker Change: [noise] features in the G. Seven we expect a similar ramp was sell it once we launch it and we have a number of features on our roadmap over the next 12 months that we would add to it from a software perspective, particularly as we learn what engages people as we started but we've been very vague and will remain bag about the features we're going to have at launch and those that were going to add for competitive.
Speaker Change: Reasons, we're just not going to give everybody else a road map.
Speaker Change: We will take our next question from Matt <unk> with Barclays. Your line is open.
Matthew Charles Taylor: Great. Thank you so much for taking the question and then Kevin I just wanted to maybe.
Matthew Charles Taylor: Go back also to some of the comments you made earlier in the call on the Stello approval and kind of maintaining the timeline for the launch.
Matthew Charles Taylor: If you could.
Matthew Charles Taylor: Talk with you said, you said things like we want to make sure. Our manufacturing capacity is there and don't want or is it a rush to launch post approval.
Matthew Charles Taylor: B also great to understand just given the excitement about what this product could mean outside of the diabetes community, how youre thinking about priority prioritizing like supply and resources in business development market development between these.
Matthew Charles Taylor: Those two opportunities going forward. Thanks.
Speaker Change: Well again, I appreciate that and again, where you stick to our launch timing here. We have made great investments. We are ready to go we are on our schedule. We're on our plan.
Matthew Charles Taylor: And we're ready to launch so we're ready when we launch it or approval timing was very rapid we gave given the FDA tremendous credit for working to us with that and our team great credit for submitting for doing a wonderful submission. They did a great job to be able to get where we got so quickly, but we're going to stick to that.
Matthew Charles Taylor: That timeframe and we think one of the reasons is it will be successful as we will have everything lined up and ready to go the way it's supposed to be when we launch it.
Matthew Charles Taylor: In all fairness I've lived through many product launches here and every time, we go too early I end up dealing with three that I'm, saying I because everybody sit in my office with three days of inventory and what are you going to do.
Matthew Charles Taylor: We are devoting the proper resources, we have several G seven manufacturing lines in Malaysia.
Matthew Charles Taylor: In fact, we just came up this summer we manufacture G. Seven here in Arizona as well. So we've got plenty of G. Seven capacity and we'll be running those lines and we have.
Matthew Charles Taylor: All lines dedicated to Stello and they will go there, but we're going to stick to our plan.
Matthew Charles Taylor: We're very comfortable with it we'll be ready to go when it's time.
Matthew Charles Taylor: About resource allocation and there's obviously a combination of resource which is when Kevin referred to a supply and thats absolutely something we have the capacity to go after it but in terms of resource allocation than on the support right now what do we do from a sales and marketing and where did the resources go we're making the decisions that really quite frankly are in the best interest of returns to the <unk>.
Matthew Charles Taylor: And in serving the unmet need so expect us to.
Matthew Charles Taylor: To continue to look at that accordingly, one of the things we are doing this year and I think you can see we've made it a priority as you know.
Matthew Charles Taylor: As we go through the organization and drive efficiencies it allows us to reinvest in the business and the REIT and all those efficiencies, we've been able to get and working through leveraging the business has allowed us to do all the work we're doing around stellar which includes all of our launch plans. So we'll continue to do the robust work that we do around resource allocation.
Matthew Charles Taylor: Really important it's really important for us to do so to in order to continue to scale, but also to scale efficiently and appropriately.
Matthew Charles Taylor: We will take our final question from Mike Kratky with Leerink partners. Your line is open.
Michael Holden Kratky: Thanks for taking the question.
Michael Holden Kratky: How are you thinking about the possibility of seeing additional pricing pressure for GCB as one of your competitors.
Michael Holden Kratky: Understood.
Matthew Charles Taylor: Duration.
Matthew Charles Taylor: Yeah.
Matthew Charles Taylor: For beers.
Matthew Charles Taylor: Well again, that's also on a geographical basis in the U S. We're very careful with our pricing our pricing contracts.
Matthew Charles Taylor: Been very consistent over the course of several years when you look at the product offerings in the world and if you compare what we have to offer we offer a number of features that make our offering much superior to anything else is going to be out there with dex com patients can connect to three devices at the same time they have the share follow system the negative the phone they can connect to.
Matthew Charles Taylor:
Matthew Charles Taylor: I can now connect directly to Apple watch, we're very comfortable with our pricing position here over time and our pricing is set up in our U S contracts, regardless of whether it's a I D.
Matthew Charles Taylor: Or people, who use sensors without it certainly as we go into the tender system in Europe Theres, a two tiered system in many countries. We offer the next kind of one product at a lower price point to be able to address those who arent on AI systems in our pricing in those countries. We have prices set for <unk> seven.
Matthew Charles Taylor: Those are set in the tender process. So we're very comfortable with where we are in those as well.
Matthew Charles Taylor: Okay.
Matthew Charles Taylor: And there are no further questions at this time I will now turn the call back to Mr. Kevin Sayer for closing remarks.
Kevin Ronald Sayer: Thanks, everybody for participating on our call today. This really was a great quarter for <unk> Com and we continued to drive the most important innovations in our industry, we're continuing to widen the gap between decks com and our competitors by driving more first in our CGM user experience, particularly in the G. Seven platform direct to watch has been the most requested additions.
Kevin Ronald Sayer: Our experience ever since we announced <unk> many years ago and now it's here our users are going to be able to as I just articulated.
Kevin Ronald Sayer: A an incredibly discrete experience with CGM on an Apple watch only and that will include all of our shared follow system as well so imagine again, a parent who wants to send their kid to school without a phone they will do.
Kevin Ronald Sayer: Do everything on a watch so they used to be able to do on their phone.
Kevin Ronald Sayer: Access to CGM on a global basis continues to expand we're very well positioned with our product portfolio to win these opportunities.
Matthew Charles Taylor: And last one just talk a bit about Stello. We went from a December filing with the FDA on shallow to a March approval for the first over the counter CGM product platform in the United States. This is going to greatly enhance the lives of many many people and we'll learn so much about it during this launch in 'twenty 'twenty four will be very.
Matthew Charles Taylor: Well positioned and twenty-five in years going forward.
Matthew Charles Taylor: And let's not forget the theme of this call. We continued to deliver outstanding worldwide topline growth continued strong operating margin expansion at the same time, we have not at all skimped on investing in our future products in R&D and we have a very strong commitment to creating the scale necessary to drive this business, where it needs to get and pursue all of our opportune.
Speaker Change: Thanks, everybody and we appreciate your support on the call today.
Matthew Charles Taylor: Yeah.
Speaker Change: Ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.
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