Q2 2024 DexCom Inc Earnings Call

Welcome to the DexCom second quarter 2024 earnings release conference call. My name is Abbey and I'll be your operator for today's call.

Abby: My name is Abby, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode.

Abby: Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star one on your touchtone phone. As a reminder, the conference is being recorded. I will now turn the call over to Sean Christensen. You may begin.

At this time, all participants are in a listen-only mode.

Speaker Change: Later we will conduct a question and answer session. During the question and answer session, if you have a question, please press star 1 on your touchtone phone.

Speaker Change: As a reminder, the conference is being recorded. I will now turn the call over to Sean Christensen. You may begin.

Sean Christensen: Thank you, Abby, and welcome to DexCom's second quarter 2024 earnings call. Our agenda begins with Kevin Sayer, DexCom's 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. 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 each so we can provide an opportunity for everyone participating today.

Sean Christensen: Thank you, Abby, and welcome to DexCom's second quarter 2024 earnings call. Our agenda begins with Kevin Sayer, DexCom's 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.

Speaker Change: 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 each so we can provide an opportunity for everyone participating today.

Sean Christensen: Please note that there are also slides available related to our second quarter 2024 performance on the DexCom Investor Relations website on the events and presentations page. With that, let's review our safe harbor statement. Some of the statements we will make on 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.

Speaker Change: Please note that there are also slides available related to our second quarter 2024 performance on the DexCom Investor Relations website on the events and presentations page. With that, let's review our Safe Harbor Statement.

Sean Christensen: All forward-looking statements included in this call are made as of the date hereof, based on information currently available to DexCom, and 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 DexCom's annual report on Form 10-K, its most recent quarterly report on Form 10-Q, and other filings with the Securities and Exchange Commission.

Sean Christensen: Except as required by law, we assume no obligation to update any such forward-looking statements after the date of this call 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. Unless otherwise noted, all references to financial measures on this call are presented on a non-GAAP basis.

Speaker Change: Some of the statements we will make on 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.

Speaker Change: All forward-looking statements included on this call are made as of the date hereof, based on information currently available to DexCom, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in the forward-looking statements.

Speaker Change: 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 DexCom's annual report on Form 10-K , most recent quarterly report on Form 10-Q , and other filings with the Securities and Exchange Commission.

Speaker Change: Except as required by law, we assume no obligation to update any such forward-looking statements after the date of this call, or to conform these forward-looking statements to actual results.

Speaker Change: Additionally, during the call we will discuss certain financial measures that have not been prepared in accordance with GAAP. Unless otherwise noted, all references to financial measures on this call are presented on a non-GAAP basis.

Sean Christensen: This non-GAAP information should not be considered in isolation or as a substitute for results or superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and the slides accompanying our second quarter earnings call for a reconciliation of these measures to their most directly comparable GAAP financial measure. Now, I will turn it over to Kevin.

Speaker Change: This non-GAAP information should not be considered in isolation or as a substitute for results or superior to results prepared in accordance with GAAP.

Speaker Change: Please refer to the tables in our earnings release and the slides accompanying our second quarter earnings call for a reconciliation of these measures to their most directly comparable GAAP financial measure. Now I will turn it over to Kevin.

Kevin Ronald Sayer: Thank you, Sean, and thank you everyone for joining us. Before we begin discussing Q2 results, let me state that overall category demand remains strong, and awareness of the value of CGM across the metabolic health spectrum continues to accelerate. This trend was evident at the recent American Diabetes Association Conference, which featured DexCom's largest evidence to date in the non-insulin type 2 space. DexCom research demonstrated significant A1C reduction in multiple studies, as well as real-world evidence showing a time and range increase of greater than four hours per day for nearly 4,000 customers using DexCom CGM at one year.

Kevin: Thank you, Sean, and thank you, everyone, for joining us.

Kevin: Before we begin discussing Q2 results, let me state that overall category demand remains strong, and awareness of the value of CGM across the metabolic health spectrum continues to accelerate. This trend was evident at the recent American Diabetes Association conference, which featured DexCom's largest evidence to date in the non-insulin type 2 space.

Kevin: DexCom research demonstrated significant A1C reduction in multiple studies, as well as real-world evidence showing a time and range increase of greater than four hours per day for nearly 4,000 customers using DexCom CGM at one year. We are leveraging several pathways of evidence generation to ensure that we are maximizing our market opportunity into the future, as our CGM systems become increasingly tailored to the unique needs of each customer.

Kevin Ronald Sayer: We are leveraging several pathways of evidence generation to ensure that we are maximizing our market opportunity into the future, as our CGM systems become increasingly tailored to the unique needs of each customer. However, despite the positive progress on these fronts, we saw three near-term trends emerge over the course of the second quarter that drove results below our expectations. First, as we have worked through our U.S. Salesforce realignment expansion, we have seen our share of new customers fall short of our expectations, despite still strong absolute customer additions.

Kevin: Despite the positive progress on these fronts, we saw three near-term trends emerge over the course of the second quarter that drove results below our expectations.

Kevin: First, as we have worked through our U.S. Salesforce realignment expansion, we have seen our share of new customers fall short of our expectations, despite still strong absolute customer additions.

Kevin Ronald Sayer: Second, our U.S. revenue per customer has stepped down faster than expected based on two primary drivers, rebate eligibility and channel mix. With G7 coverage emerging faster than expected, we realized greater rebate eligibility relative to initial expectations and compared to 2023 levels. While we believe this enhanced G7 coverage has helped facilitate new customer starts, as mentioned above, the pace of these starts did not allow us to offset the temporary impact from this rebate eligibility. We expect the impact of this rebate eligibility dynamic to reach its peak in the third quarter, and Jeremy will provide specific color on the Q3 expectations shortly.

Kevin: Second, our U.S. revenue per customer has stepped down faster than expected based on two primary drivers, rebate eligibility and channel mix.

Kevin: With G7 coverage emerging faster than expected, we realized greater rebate eligibility relative to initial expectations and compared to 2023 levels.

Kevin: While we believe this enhanced G7 coverage has helped facilitate new customer starts, as mentioned above, the pace of these starts did not allow us to offset the temporary impact from this rebate eligibility. We expect the impact of this rebate eligibility dynamic will reach its peak in the third quarter, and Jeremy will provide specific color on the Q3 expectations shortly.

Kevin Ronald Sayer: Beyond the transitory G7 eligibility dynamic, we also saw revenue per customer impacted by the U.S. channel mix. However, U.S. customer growth has remained strong in our pharmacy business as we expand our reach into primary care and type 2 diabetes more broadly. However, our growth in the DME channel has trailed our plan. The DME distributors remain important partners for us in our business, and we have not executed well this quarter against these partnerships. We need to refocus on those relationships. Finally, our international performance was also lower than expected in the quarter.

Jeremy: Beyond the transitory G7 eligibility dynamic, we also saw revenue per customer impacted by U.S. channel mix dynamics.

Jeremy: U.S. customer growth has remained strong in our pharmacy business as we expand our reach into primary care and type 2 diabetes more broadly. However, our growth in the DME channel has trailed our plan. The DME distributors remain important partners for us in our business, and we've not executed well this quarter against these partnerships. We need to refocus on those relationships.

Kevin Ronald Sayer: While we delivered strong performance in some of our core markets, such as the UK and France, we saw category growth soften in certain geographies as type 1 penetration advances in these regions. However, we continue to see a significant runway ahead across our international footprint, particularly as we drive greater access for people with type 2 diabetes. To account for these trends and appropriately reflect our base assumption, we've lowered our full-year revenue guidance to 11-13% organic growth.

Jeremy: Finally, our international performance was also lighter than expectations in the quarter.

Jeremy: While we delivered strong performance in some of our core markets, such as the UK and France, we saw category growth soften in certain geographies as type 1 penetration advances in these regions. We continue to see a significant runway ahead across our international footprint, particularly as we drive greater access for people with type 2 diabetes.

Jeremy: To account for these trends and appropriately reflect our base assumption, we've lowered our full-year revenue guidance to 11 to 13 percent organic growth.

Kevin Ronald Sayer: We have higher expectations for our business than what we experienced this quarter. We believe we have an incredible product, an incredible future pipeline, and an unparalleled market opportunity. We also have a great team capable of leading this market, but I expect more from myself and more from my team going forward.

Speaker Change: We have higher expectations for our business than what we experienced this quarter. We believe we have an incredible product, an incredible future pipeline, and an unparalleled market opportunity. We also have a great team capable of leading this market, but I expect more from myself and more from my team going forward.

Kevin Ronald Sayer: So, what are we doing to enhance our competitive position and reestablish momentum? It starts with our product portfolio, which we continue to strengthen to put our field sales team in a great position with clinicians. In the second quarter, we expanded our direct-to-Apple Watch connectivity with G7, launching in the U.S. and several additional international markets with this feature that has been among our most requested for several years.

Speaker Change: So what are we doing to enhance our competitive position and reestablish momentum? It starts with our product portfolio, which we continue to strengthen to put our field sales team in a great position with clinicians.

Speaker Change: In the second quarter, we expanded our direct to Apple Watch connectivity with G7, launching in the U.S. and several additional international markets with this feature that has been among our most requested for several years.

Kevin Ronald Sayer: We expanded the international launch of the DexCom One Plus system, now reaching 18 international markets with our smaller G7 form factor for our DexCom One users. We've built upon the performance of G7 to make it even better. This includes a continuation of our monthly cadence of software updates, which included the second quarter additions of medication logging and the ability to ingest activity data into our G7 app. Additionally, we've introduced a stronger adhesive to support our customers into the summer months, and we expanded the G7 Bluetooth connectivity range by more than 65%. We advanced DexCom CGM leadership in the ID space with the launches of G7 integrations with Tandem's Mobi system and Insulet's Omnipod 5.

Speaker Change: We expanded the international launch of the Dexcom One Plus system, now reaching 18 international markets with our smaller G7 form factor for our Dexcom One users.

Speaker Change: We've built upon the performance of G7, making it even better. This includes a continuation of our monthly cadence of software updates, which included the second quarter additions of medication logging and the ability to ingest activity data into our G7 app.

Speaker Change: We've introduced a stronger adhesive to support our customers into the summer months, and we expanded the G7 Bluetooth connectivity range by more than 65%.

Speaker Change: We advance DexCom's CGM leadership in the ID space with the launches of G7 integrations with Tandem's MobiSystem and Insulet's Omnipod 5.

Kevin Ronald Sayer: We've strengthened our existing products while preparing for the most expansive product launch in our company's history with the upcoming August launch of Stelo. We're seeing the demand for CGM grow in the non-insulin space and consumer use, and believe that we've created a unique and engaging system to drive people to better metabolic health outcomes. Our team has worked hard to build a scalable service model for Stelo that will be great for our customers, including the e-commerce experience, seamless delivery through Amazon Fulfillment, insightful product features, digital support options, and much more to come.

Speaker Change: We've strengthened our existing products while preparing for the most expansive product launch in our company's history with the upcoming August launch of Stello.

Speaker Change: We are seeing the demand for CGM build in the non-insulin space and consumer use and believe that we've created a unique and engaging system to drive people to better metabolic health outcomes.

Speaker Change: Our team has worked hard to build a scalable service model for Stello that will be great for our customers, including the e-commerce experience.

Speaker Change: Seamless delivery through Amazon fulfillment, insightful product features, digital support options, and much more to come. We'll offer both single purchase opportunities as well as discounted subscriptions that bring the monthly cost below $100.

Kevin Ronald Sayer: We'll offer both single purchase opportunities as well as discounted subscriptions that bring the monthly cost below $100. Stelo will be a full launch on Stelo.com, and we continue to expect approximately 1% of revenue contribution in 2024.

Speaker Change: Stelo will be a full launch on Stelo.com and we continue to expect approximately 1% of revenue contribution in 2024.

Kevin Ronald Sayer: We are committed to personalized approaches to metabolic health management through updates like these. This is what will enable us to capture greater share and maintain high rates of retention and utilization across our customer base. We feel that our expanded U.S. sales force positions us very well to reignite our growth opportunity now and well into the future. We have the ability to dive deep into the technological leadership that DexCom provides for diabetes specialty practices.

Speaker Change: We are committed to personalized approaches to metabolic health management through updates like these. This is what will enable us to capture greater share and maintain high rates of retention and utilization across our customer base.

Speaker Change: We feel that our expanded U.S. sales force positions us very well to reignite our growth opportunity now and well into the future. We have the ability to dive deep into the technological leadership that DexCom provides for diabetes specialty practices.

Kevin Ronald Sayer: We have also expanded our reach and ability to highlight the simplicity of our platform and how it fits into a busy primary care practice. We have the advantage of better coverage and the lowest out-of-pocket cost for the insulin population, soon to be enhanced by the simplicity of the Stelo OTC platform.

Speaker Change: We have also expanded our reach and ability to highlight the simplicity of our platform and how it fits into a busy primary care practice. We have the advantage of better coverage and the lowest out-of-pocket costs for the insulin population and soon to be enhanced by the simplicity of the Stelo OTC platform.

Kevin Ronald Sayer: As we take significant steps to broaden our addressable market well into the future with Stelo and our expanded U.S. sales force, we are also working hard to ensure simplified access to our systems in the markets we serve. In the second quarter, our team worked with the CDC to create new ICD-10 diagnostic codes for problematic hypoglycemia. These codes, which were published in May and go into effect in October, can simplify the process of documenting hypoglycemic events that qualify non-insulin users for CGM coverage.

Speaker Change: As we take significant steps to broaden our addressable market well into the future with Stello and our expanded U.S. sales force, we are also working hard to ensure simplified access to our systems in the markets we serve.

Speaker Change: In the second quarter, our team worked with the CDC to create new ICD-10 diagnostic codes for problematic hypoglycemia. These codes, which were published in May and go into effect in October , can simplify the process of documenting hypoglycemic events that qualify non-insulin users for CGM coverage.

Kevin Ronald Sayer: Our international market expansion efforts also progressed into the second quarter as we received coverage in France for people with type 2 diabetes on basal insulin and began serving these customers in June. We also transitioned to direct sales in Japan at the outset of the quarter and look forward to taking control of our commercial efforts in that crucial market. To summarize, our second quarter performance and 2024 outlook are not up to our standards, and we look forward to better capitalizing on our opportunity as we move forward. With that, I'll turn it over to Jeremy. Thank you, Kevin.

Speaker Change: Our international market expansion efforts also progressed into the second quarter, as we received coverage in France for people with type 2 diabetes on basal insulin, and began serving these customers in June . We also transitioned to direct sales in Japan at the outset of the quarter, and look forward to taking control of our commercial efforts in that crucial market.

Speaker Change: To summarize, our second quarter performance and 2024 Outlook are not up to our standards, and we look forward to better capitalizing on our opportunity as we move forward. With that, I'll turn it over to Jereme.

Jereme M. Sylvain: As a reminder, unless otherwise noted, the financial metrics presented today will be discussed on a non-GAAP basis. Reconciliations to GAAP can be found in today's earnings release as well as the slide deck on our IR website. For the second quarter of 2024, we reported worldwide revenue of $1.004 billion, compared to $871.3 million in the second quarter of 2023, representing growth of 15% on a reported basis and 16% on an organic basis.

Jereme: Thank you, Kevin. As a reminder, unless otherwise noted, the financial metrics presented today will be discussed on a non-GAAP basis.

Jereme: Reconciliations to GAP can be found in today's earnings release as well as the slide deck on our IR website.

Jereme: For the second quarter of 2024, we reported worldwide revenue of $1.004 billion, compared to $871.3 million in the second quarter of 2023, representing growth of 15% on a reported basis and 16% on an organic basis.

Jereme M. Sylvain: As a reminder, our definition of organic revenue excludes the impact of foreign exchange in addition to non-CGM revenue acquired or divested in the trailing 12 months. U.S. revenue totaled $732 million for the second quarter, compared to $617 million in the second quarter of 2023, representing growth of 19%.

Jereme: As a reminder, our definition of organic revenue excludes the impact of foreign exchange in addition to non-CGM revenue acquired or divested in the trailing 12 months.

Jereme: U.S. revenue totaled $732 million for the second quarter compared to $617 million in the second quarter of 2023, representing growth of 19 percent.

Jereme M. Sylvain: As Kevin mentioned, we experienced lower-than-expected new customer starts in conjunction with our Salesforce expansion and realignment, particularly in the DME channel, as well as a near-term impact from pharmacy eligibility changes, which lowered our revenue per customer relative to our expectation. Together, these dynamics adversely impacted our revenue this quarter by approximately $40 million as compared to our internal estimates. Based on the compounding effect of these lower second quarter new customer starts, we also expect our growth rate in the back half of the year to be impacted. To offset this, our team is working aggressively to improve our execution and deliver the higher market share levels that we believe our product deserves. International revenue grew 7%, totaling $272 million in the second quarter.

Jereme: As Kevin mentioned, we experienced lower-than-expected new customer starts in conjunction with our Salesforce expansion and realignment, particularly in the DME channel, as well as a near-term impact from pharmacy eligibility changes, which lowered our revenue per customer relative to our expectation.

Kevin: Together, these dynamics adversely impacted our revenue this quarter by approximately $40 million as compared to our internal estimate.

Kevin: Based on the compounding effect of these lower second quarter new customer starts, we also expect our growth rate in the back half of the year to be impacted. To offset this, our team is working aggressively to improve our execution and deliver the higher market share levels that we believe our product deserves.

Kevin: International revenue grew 7%, totaling $272 million in the second quarter.

Jereme M. Sylvain: International Organic Revenue Growth was 10% for the second quarter. While we anticipated our international growth to slow this quarter as we lagged our very strong performance from Q2 2023, our results came in lighter than expected. Our miss on new customers impacted us by approximately $10 million in the quarter. Our international performance can often ebb and flow based on coverage decisions and distributor purchases. But, as Kevin mentioned, there remains a long runway ahead for DexCom CGM globally.

Kevin: International Organic Revenue Growth was 10% for the second quarter.

Kevin: While we anticipated our international growth to slow this quarter as we lapped our very strong performance from Q2 2023, our results came in lighter than expected.

Kevin: Our miss on new customers impacted us by approximately $10 million on the quarter.

Kevin: Our international performance can often ebb and flow based on coverage decision and distributor purchases.

Jereme M. Sylvain: We continue to invest in infrastructure to expand our geographical presence, provide compelling evidence to expand market access in new segments of key markets, and leverage our product portfolio to meet the unique needs of various customers and patients. Our second quarter gross profit was $638.1 million, or 63.5% of revenue, which was in line with the 63.5% of revenue we delivered in the second quarter of 2023.

Kevin: But, as Kevin mentioned, there remains a long runway ahead for DexCom CGM globally. We continue to invest in infrastructure to expand our geographical presence, provide compelling evidence to expand market access in new segments of key markets, and leverage our product portfolio to meet the unique needs of various customers and health systems.

Speaker Change: Our second quarter gross profit was $638.1 million or 63.5% of revenue, which was in line with the 63.5% of revenue we delivered in the second quarter of 2023.

Jereme M. Sylvain: We continue to see further migration of our customer base from G6 to G7 in the second quarter as we finalize new pump integrations and transition DexCom 1 to the G7 form factor. Between this ongoing customer transition and the continued ramp-up of our high-volume manufacturing facilities in Mesa and Malaysia, we are making steady progress towards our long-term cost target. Operating expenses were $442.7 million in Q2 of 2024 compared to $395.1 million in Q2 of 2023.

Kevin: We continue to see further migration of our customer base from G6 to G7 in the second quarter as we finalize new pump integrations and transition DexCom1 to the G7 form factor.

Kevin: Between this ongoing customer transition and continued ramp-up of our high-volume manufacturing facilities in Mesa and Malaysia, we are making steady progress towards our long-term cost targets.

Kevin: Operating expenses were $442.7 million for Q2 of 2024 compared to $395.1 million in Q2 of 2023.

Jereme M. Sylvain: Operating income was $195.4 million, or 19.5% of revenue, in the second quarter of 2024 compared to $158.4 million, or 18.2% of revenue, in the same quarter of 2023. Adjusted EBITDA was $283.9 million, or 28.3% of revenue, for the second quarter compared to $232.6 million, or 26.7% of revenue, for the second quarter of 2023. Net income for the second quarter was $174.3 million, or $0.43 per share.

Kevin: Operating income was $195.4 million or 19.5% of revenue in the second quarter of 2024, compared to $158.4 million or 18.2% of revenue in the same quarter of 2023.

Kevin: Adjusted EBITDA was $283.9 million or 28.3% of revenue for the second quarter compared to $232.6 million or 26.7% of revenue for the second quarter of 2023.

Kevin: Net income for the second quarter was $174.3 million or $0.43 per share.

Jereme M. Sylvain: We remain in a great financial position, closing the quarter with greater than $3.1 billion of cash-in-cash equivalent. And based on our strong cash position, consistent free cash flow generation, and ongoing growth opportunities, we are announcing an authorization for a share repurchase program of up to $750 million. Starting with full year 2024, we are decreasing our revenue guidance to a range of $4.00 to $4.05 billion, representing organic growth of 11 to 13% for the year.

Kevin: We remain in a great financial position, closing the quarter with greater than $3.1 billion of cash-in-cash equivalents.

Kevin: And based on our strong cash position, consistent free cash flow generation, and ongoing growth opportunities, we are announcing an authorization for a share repurchase program of up to $750 million.

Kevin: Turning to guidance.

Kevin: Starting with full year 2024, we are decreasing our revenue guidance to a range of $4.00 to $4.05 billion, representing organic growth of 11 to 13 percent for the year.

Jereme M. Sylvain: As mentioned earlier, the compounding effect of our slower-than-expected new customer growth in the USDME channel and international business, as well as increased pharmacy eligibility, resulted in the need to recalibrate the guide. Our updated guidance reflects these dynamics and assumes a longer ramp-up in productivity in our U.S. sales force. For margins, we are reducing our non-GAAP gross profit margin guidance to approximately 63%.

Kevin: As mentioned earlier, the compounding effect of our slower-than-expected new customer growth in the USDME channel and international business, as well as increased pharmacy eligibility, resulted in the need to recalibrate the guide. Our updated guidance reflects these dynamics and assumes a longer ramp in productivity in our U.S. sales force.

Kevin: For margins, we are reducing our non-GAAP gross profit margin guidance to approximately 63%, while maintaining our prior guidance on non-GAAP operating margin and adjusted EBITDA at approximately 20 and 29% respectively.

Jereme M. Sylvain: While maintaining our prior guidance on non-GAAP operating margin and adjusted EBITDA at approximately 20 and 29%, respectively. In addition to our annual guidance, we are providing two additional data points to help investors and analysts understand some of the unique elements impacting our revised guidance for 2024. First, the impact on new patients from our Salesforce initiative, combined with our revenue per customer trends that Kevin detailed, will change the historical seasonality pattern that we have typically experienced. These impacts are expected to reach their peak in the third quarter, with total revenue expected to be between $975 million and $1 billion.

Kevin: In addition to our annual guidance, we are providing two additional data points to help investors and analysts understand some of the unique elements impacting our revised guidance in 2024.

Kevin: First, the impact to new patients from our Salesforce initiative, combined with our revenue per customer trends that Kevin detailed, will change the historical seasonality pattern that we have typically experienced.

Kevin: These impacts are expected to reach their peak in the third quarter, with total revenue expected to be between $975 million and $1 billion.

Jereme M. Sylvain: In conjunction with this revenue outlook, we thought it would be helpful to provide a mid-year update on our global active customer base, which we now estimate to be between $2.5 and $2.6 million. This represents strong growth over where we finished in 2023, though the growth percentage has decelerated. Our hope is these updates will provide additional visibility as our team works to implement several of the areas of focus that we have aligned on over the past month and as our sales force continues to ramp up efficiency. With that, we can open up the call to Q&A. Sean?

Speaker Change: In conjunction with this revenue outlook, we thought it would be helpful to provide a mid-year update on our global active customer base, which we now estimate to be between 2.5 and 2.6 million. This represents strong growth over where we finished 2023, though the growth percentage has decelerated slightly.

Speaker Change: Our hope is these updates will provide additional visibility as our team works to implement several of the areas of focus that we have aligned on over the past month and as our sales force continues to ramp their efficiency.

Sean Christensen: Thank you, Jereme. As a reminder, we ask our audience to limit themselves to only one question at this time and then re-enter the queue if necessary. Abby, please provide the Q&A instructions.

Speaker Change: With that, we can open up the call for Q&A. Sean? Thank you, Jereme. As a reminder, we ask our audience to limit themselves to only one question at this time and then re-enter the queue if necessary. Abby, please provide the Q&A instructions.

Abby: Thank you. We will now begin the question-and-answer session. If you have a question, please press star 1 on your touchtone phone. If you wish to be removed from the queue, please press star 1 again. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers.

Abby: Thank you. We will now begin the question and answer session. If you have a question, please press star 1 on your touchtone phone. If you wish to be removed from the queue, please press star 1 again.

Robert Justin Marcus: Once again, if you have a question, please press star 1 on your touchtone phone. Robby Marcus with JP Morgan is on the line with a question. Your line is open. Thanks. I have a lot more than one, but I'll keep it to one.

Abby: If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star 1 on your touchtone phone.

Abby: Robby Marcus with J.P. Morgan is on the line with a question. Your line is open.

Kevin Ronald Sayer: Guidance is moving down about 400 million. So I appreciate, you know, a few million here or there. But I mean, this is such a step change in the business and the outlook and the trend. Medtech companies split up sales forces all the time and grow them. You've done it multiple times, kind of in shock at how big of a disruption and a downward guide it is on a Salesforce expansion. I feel like there has to be more going on.

Speaker Change: Thanks. I have a lot more than one, but I'll keep it to one. Guidance is moving down about $400 million, so I appreciate a few million here or there, but this is such a step change in the business and the outlook and the trends.

Speaker Change: You know, med tech companies split sales forces all the time and grow them. You've done it multiple times. I'm just

Speaker Change: Kind of in shock at how big of a disruption and a downward guide it is.

Kevin Ronald Sayer: Maybe you could give us more color on, you know, are basal patients using it less? Are you seeing GLP-1 fears pop up, and are type two patients not starting on therapy as much?

Speaker Change: On a Salesforce expansion, I feel like there has to be more going on.

Speaker Change: Maybe you could give us more color into, you know, are basal patients using it less? Are you seeing GLP-1 fears pop up? And, you know, type 2 patients not starting on therapy as much? Are you seeing, you know,

Kevin Ronald Sayer: Abbott and Medtronic take a lot more share. I feel like there's just, We need more explanation for the third and fourth quarter guidance cuts behind it. Thanks a lot.

Speaker Change: you know Abbott and Medtronic take a lot more share. I feel like there's just.

Speaker Change: We need more explanation for the third and fourth quarter guidance cut behind it. Thanks a lot.

Kevin Ronald Sayer: Thanks, Robby. I appreciate the question and understand your position. Let me start by going back to the numbers and the things we talked about in our script. We're short a large number of new patients as compared to where we thought we would be at this point in time. And Jeremy can provide you with the numbers as to what the new patient shortage constitutes. There is a combination of things as far as the new patient shortage is concerned. Obviously, disruption on the Salesforce expansion side, but this was a different expansion for us than the others. In other ones we've done, we literally took territories and just divided them geographically.

Speaker Change: Thanks, Robbie. I appreciate the question and understand your position. Let me start with

Speaker Change: Let's go back to the numbers and the things we talked about in our script. We're short a large number of new patients as to where we thought we would be at this point in time and Jeremy can provide you with the numbers as to what the new patient miss constitutes.

Jeremy: There is a combination of things as far as the new patient shortage. Obviously, disruption on the sales force expansion side.

Jeremy: This was a different expansion for us than other ones. In other ones we've done, we literally took territories and just divided them geographically. And this time we changed roles, we changed positions people called on. It was a much more disruptive.

Kevin Ronald Sayer: In this time, we changed roles. We changed physicians people called on. It was a much more disruptive, uh, expansion we've had in the past, and that did lead to a lot of disruption, particularly at the beginning of the quarter; we saw things getting better towards the end. With respect to the other factors, as far as market share is concerned, we said we lost market share in the DME channel. While we've done well in the pharmacy channel, as you can all see from Scripps, and Scripps is filling the pharmacy on the DME side, we've lost share, and that has hurt us.

Jeremy: expansion we've had in the past, and that did lead to a lot of disruption, particularly at the beginning of the quarter. We saw things getting better towards the end.

Jeremy: With respect to the other factors, as far as market share, we said we've lost market share in the DME channel. While we've done well in the pharmacy channel, as you can all see by Scripps, and Scripps are filling the pharmacy on the DME side.

Kevin Ronald Sayer: And again, that is patients, including new patients, but it's also, as we're losing in that category, we're also losing the customers who have the highest annual revenue per year as a patient. So, you're losing those.

Jeremy: We've lost share and that that has hurt us. And again, that is patients. It's including new patients. But it's also as we're losing in that category, we're also losing the customers who have the highest annual revenue per year as a patient. So

Kevin Ronald Sayer: And then some of those patients, even though we've lost sharing the DME channel, have shifted pharmacy, but that is a lower revenue per year number. The last piece of this is rebate eligibility. And again, we expected G7 to have rebate eligibility on a schedule that was literally twice as fast as G6. It's been three times faster.

Jeremy: You're losing those. And then some of those patients, even though we've lost sharing the DME channel, have shifted the pharmacy.

Jeremy: But that is a lower revenue per year number. The last piece of this is rebate eligibility.

Jeremy: And again, we expected G7 to have rebate eligibility over schedule that was literally twice as fast as G6. It's been three times faster. G7 got...

Kevin Ronald Sayer: G7 got to full rebate very quickly, quicker than we had planned. So all those things added together, while they had somewhat of an effect on Q2, they had a longer-term effect on the rest of the year. And so we added all those things together. Jeremy came up with more.

Jeremy: to full rebate very quickly, quicker than we had planned. So all those things added together, while they had somewhat of an effect on Q2, they have a longer range effect.

Jereme M. Sylvain: You want to add to that? Yeah, so I'll give some context to the numbers. You're right, Robbie.

Jeremy: Jeremy came up with more. You want to add to that? Yeah, so give some context to the numbers. You're right, Robby. At the top end of guidance, it's about a $300 million decline.

Jereme M. Sylvain: At the top end of guidance, it's about a $300 million decline. In Kevin's prepared remarks, we talked about $50 million, you know, really impacting the second quarter. So to give you some context, the new patient missing Q2, which we expected to drag out into Q3 as we kind of navigate through those changes, both in the U.S. and outside the U.S. We had some new patient misses there. That's about $125 million per year of that impact.

Speaker Change: In Kevin's prepared marks, we talked about 50 million, you know, really impacting the second quarter. Those end up playing out to be a little bit larger as you expand those over the course of the year. So to give you some context.

Speaker Change: The new patient missing Q2, which we expect it to drag out into Q3 as we kind of navigate through those changes.

Speaker Change: both in the U.S. and outside the U.S. We had some new patient misses there. That's about 125 million.

Jereme M. Sylvain: The channel mix and really the loss of share in DME is a big one for us, and that's about $100 million over the course of the year. It certainly impacted Q2, but we expect it to impact the rest of the year as well as those essentially work into full quarters. And then the rebate eligibility happened again quicker than we would have expected. Again, eventually, you will get there. It happened quicker than we expected. That's about $75 million.

Speaker Change: dollars on the year of that impact.

Speaker Change: The channel mix and really the loss of share and DME, that's a big one for us, and that's about $100 million over the course of the year, certainly impacted Q2.

Speaker Change: but we expect it to impact the rest of the year as well.

Speaker Change: As those essentially work into full quarters. And then the rebate eligibility happened again quicker than we would have expected. Again, eventually you get there, it happened quicker than we expected. That's about 75 million. So we add those up, that's about the 300 million that you see. Certainly not something we're happy about, but in full transparency, we needed to make sure what we saw.

Jereme M. Sylvain: So we add those up. That's about the $300 million that you see. Certainly not something we're happy about, but in full transparency, we needed to make sure that what we saw as we closed out the second quarter, we're transparent about what the impact is for the balance of the year. Thanks. Your next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open. Good afternoon.

Speaker Change: As we closed out the second quarter, we're transparent about what the impact is for the balance of the year.

Speaker Change: Thanks.

Speaker Change: Your next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open.

Kevin Ronald Sayer: Thanks for taking the question. That was a super helpful review of the issues. Maybe, Kevin, if you could go through kind of what you're doing to address each of those issues and when you think they'll be resolved. You know, it's not clear to me, for example, you know, losing share in the DME channel, why that's happening, and, you know, how you can reverse that. Just lastly, you have an LRP out there for $25.

Lawrence H. Biegelsen: Good afternoon. Thanks for taking the question. That was a super helpful review of the issues. Maybe, Kevin, if you could go through kind of what you're doing to address each of those issues.

Speaker Change: When you think they'll be resolved.

Speaker Change: You know, it's not clear to me, for example, you know, losing share in the DME channel, why that's happening and, and, you know, how you, you know, reverse that. It's just lastly, you have an LRP out there for 25. Is that still valid? Thanks for taking the question.

Kevin Ronald Sayer: Is that still valid? Thanks for taking the question. Yeah, let me start with the LRP for 25.

Kevin Ronald Sayer: Yes, we believe our LRP for 25 is valid, but our revenue will probably come in closer to the lower end of the range rather than the upper end of the range, as we sit here today. But we've achieved incredible progress on the P&L side, the operating margin, and the EBITDA side, or gross profit side, of that LRP. So from a P&L perspective, we're definitely hitting all our goals on the LRP side. As far as fixing all these things and what fixes we have in place, obviously, it's going to be a bit of a process on the rebate eligibility front. We believe this caps out in Q3, and we plan for this to cap out in Q4. It just happened a couple of quarters earlier than we'd planned.

Speaker Change: Yeah, let me start with the LRP for 25. Yes, we believe our LRP for 25 is valid, but our revenue will probably come in closer to the lower end of the range rather than the upper end of the range, as we sit here today. But we've achieved incredible progress on the P&L side, our operating margin, and EBITDA side, our gross profit side on that LRP.

Speaker Change: So from a P&L perspective, we're definitely hitting all our goals on the LRP side. As far as fixing all these things and what fixes we have in place, obviously it's going to be a bit of a process.

Speaker Change: On the rebate eligibility front.

Speaker Change: We believe that caps out in Q3 and we plan for this to cap out in Q4. It just happened a couple quarters earlier.

Kevin Ronald Sayer: So that is very much a temporary thing and accelerated. With respect to DME market share, one of the factors that have actually happened that created part of this is that several of the Medicare Advantage programs went to pharmacy reimbursement. So, patients who were being served by the DME channel shifted to the pharmacy, and that is a piece of our lost DME share. I can't quantify exactly how much, but that's some of it.

Speaker Change: then we'd plan. So that is is very much a temporary thing and accelerated. With respect to DME market share, one of the factors that has actually happened that created part of this is several of the Medicare Advantage programs went to pharmacy reimbursement, so

Speaker Change: Patients who were being served by the DME channel shifted to the pharmacy and that is a piece of our lost DME share. I can't quantify exactly how much but that's some of it.

Kevin Ronald Sayer: Added to that, we need to refocus on those relationships. We need to do better, and we will. Talk with them.

Speaker Change: Adding to that, we need to refocus on those relationships. We need to do better, and we will.

Kevin Ronald Sayer: We have some plans and some things in place to start off there, but it's early. We have to implement them. And again, DME data is really the last piece of the puzzle as far as our revenues, as far as where we stand by the end of the year, given the data sources that we all look at. It's not as simple as the scripts on the pharmacy side.

Speaker Change: Talk with them, we have some plans and some things in place to start off there.

Speaker Change: But it's early. We have to implement them. And again, DME data is really the last piece of the puzzle as far as our revenues.

Speaker Change: As far as where we get by the end of the year, just given the data sources that we all look at, it's not as simple as the scripts on the pharmacy side. So we're addressing that. We will put more emphasis and time there. We'll send more customers through that channel and do better by those guys.

Kevin Ronald Sayer: So we're addressing that. We will put more emphasis and time there. We'll send more customers through that channel and do better for those guys. So we'll keep looking. On the international front, there is another piece to remember.

Kevin Ronald Sayer: We've got a few things going on there. The timing of some of the tenders affects the numbers. There are some tenders that kick in on July 1 that will help with international growth, and that will be helpful there. We're also looking for type two expansion, as I said on the call. We just got base coverage in France, and that's kicking in. We know some of the other countries are moving towards base coverage very quickly, and we can play there with our Dexcom One Plus product. Dexcom One Plus is still early in the game, and we're seeing that begin to pick up.

Speaker Change: So we'll keep looking. On the international front, another piece to remember, we've got a few things going on there. Timing of some of the tenders affects the numbers. There are some tenders that kick in July 1st that will help on the international growth.

Speaker Change: and and that will be helpful there. We're also looking for type 2 expansion as I said on the call.

Speaker Change: We just got basal coverage in France. That's kicking in. We know some of the other countries are.

Speaker Change: Moving towards basal coverage very quickly and we can play there with our Dexcom One Plus product. Dexcom One Plus is still early.

Kevin Ronald Sayer: So there are a number of levers to pull and a number of things we're working on, Larry. I can't quantify each one of them, but suffice to say we're not just sitting here. Jereme, do you want to add to that?

Speaker Change: in the game, and we're seeing that begin to pick up.

Speaker Change: There are a number of levers to pull, and a number of things we're working on, Larry. I can't quantify each one of them, but suffice to say, we're not just sitting here.

Jereme M. Sylvain: Yeah, and then maybe below the hood a little bit in terms of how we allocate the investment dollars, Larry. We are reprioritizing and reallocating investments to where we know that they ultimately drive the most bang for the buck. So the team is working on that diligently in terms of refocusing where those dollars and those efforts go. So, not given the specifics, just given the competitive nature of it, but rest assured there are changes being made underlying the business to ensure that we get back on top of our new patients. Thank you. Your next question comes from the line Judge Johnson delivered to Baird. Thank you. Good afternoon, guys.

Jeremy: Jeremy, you want to add to that? Yeah, and then maybe below the hood a little bit in terms of how we allocate the investment dollars, Larry, we are reprioritizing and reallocating investments.

Jeremy: to where we know that it ultimately drives the most banks. So the team is working on that diligently.

Speaker Change: In terms of refocusing where those dollars and those efforts go. So not given the specifics, just given the competitive nature of it, but rest assured there are changes being made underlying the business to ensure that we get back on top of our new patients.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Judge Johnson with Baird. Your line is...

Thank you.

Kevin Ronald Sayer: Kevin, maybe following up on your DME comments, you say you need to maybe work on some relationships there. You know, any color you can give there and not air dirty laundry, but I guess in one of our DME checks here recently, we kind of won the conversation, but I heard that, you know, maybe some of the comments you made about CMS changes and who would bear the brunt of any kind of reimbursement change in 2026 or 2027 would maybe be borne more by DME than you guys. You know, are things like that what kind of strain some relationships? What else might have strained relationships?

Unknown Executive: Good afternoon, guys. Kevin, maybe following up on your DME comments. You say you need to maybe work on some relationships there. You know, any color you can give there, and not the air dirty laundry, but I guess in one of our DME checks here recently, we kind of want off to conversation, but it heard that you don't maybe some of the comments you made about CMS changes and who would bear the brunt of any kind of reimbursement change in 2026 or 2027, would maybe be born more by DME than you guys. You know, is it things like that that kind of strange some relationships? What else might have strange relationships?

Jeffrey D. Johnson: Kevin, maybe following up on your DMV comments, you say you need to maybe work on some relationships there. You know, any color you can give there.

Jeffrey D. Johnson: And not to air dirty laundry, but I guess in one of our DME checks here recently, we kind of won off the conversation, but it heard that, you know, maybe some of the comments you made about CMS changes and who would bear the brunt of the, any kind of reimbursement change in 2026 or 2027 would maybe be borne more by DME than you guys, you know, is it things like that, that kind of strained some relationships? What else might have strained relationships and have there been any kind of formulary changes or anything in DME where they have just wholeheartedly moved patients to Abbott and it's going to be harder for you to get those patients back going forward? Thank you.

Kevin Ronald Sayer: And have there been any kind of formulary changes or anything in DME where they have just wholeheartedly moved patients to Abbott, and it's going to be harder for you to get those patients back going forward? Thank you. I don't think it's been anything formulary or systematic along those lines. I think I need to take you, I'll let Jereme take some more details, but let me move you guys back a little bit in time.

Unknown Executive: And have there been any kind of formulary changes or anything in DME where they have just wholeheartedly moved patients to Abbott and it's going to be harder for you to get those patients back going forward.

Unknown Executive: Thank you. I don't think it's been anything formulary or systematic along those lines.

Unknown Executive: I think I need to take you out.

Jeffrey D. Johnson: I don't think it's been anything formulary or systematic along those lines. I think I need to take you, I'll let Jereme take some more details, but let me move you guys back a little bit in time. When we started this journey down pharmacy coverage, we had as a company zero relationships in the pharmacy channel.

Kevin Sayer: I'll let Jeremy take some more details, but let me move you guys back a little bit in time. When we started this journey down pharmacy coverage, we had as a company zero relationships in the pharmacy channel. We worked very hard to develop those relationships because, as you can all see by our numbers and our largest competitors' numbers, that is where a large portion of the businesses moved at this point in time. We put a tremendous amount of effort there because we've never been there before. We didn't have any infrastructure. We didn't have other products there.

Kevin Ronald Sayer: When we started this journey down pharmacy coverage, we had zero relationships in the pharmacy channel. We worked very hard to develop those relationships because, as you can all see by our numbers and our largest competitors' numbers, that is where a large portion of the business has moved at this point in time. We put a tremendous amount of effort there because we'd never been there before. We didn't have any infrastructure. We didn't have any other products there. We didn't have any relationships.

Jeremy: We worked very hard to develop those relationships, because as you can all see by our numbers and our largest competitors' numbers, that is where a large portion of the business has moved at this point in time.

Jeremy: We put a tremendous amount of effort there because we'd never been there before. We didn't have any infrastructure. We didn't have other products there. We didn't have relationships there.

Kevin Sayer: We didn't have relationships there.

Kevin Ronald Sayer: I think in creating and building those relationships, we ignored other relationships that were very important to us more than we should have. And so we need to balance that a little better and make sure that our customers get their products through a source that's easy, efficient, and economical for them. We felt that to a large extent we were doing that, but we think we need to do more. Jereme, do you want to take some more on? No, that's it.

Kevin Sayer: I think in creating and building those relationships, we ignored other relationships that were very important to us more than we should have. And so we need to balance that a little better and make sure that our customers get their product through a source that's easy, efficient, and economical for them. We fell to a large extent. We were doing that, but we think we need to do more.

Jeremy: I think in creating and building those relationships, we ignored other relationships that were very important to us more than we should have.

Jeremy: And so we need to balance that a little better and make sure that our customers get their product through a source that's easy, efficient, and economical for them.

Kevin Sayer: Jeremy, you want to take some more off. You know, that's it. And Jeff, to your comment on, you know, if there's any CMS changes in terms of reimbursement down there, we certainly did not say that. I think that was maybe a competitor said that. What we had said was, we're partners. And so, if there's any changes in CMS reimbursement as partners, we would look at it as partners. And that would be our expectation going forward.

Jereme: We felt to a large extent we were doing that, but we think we need to do more. Jereme, you want to take some more on? No, that's it. And Jeff, to your comment on, you know, if there's any CMS changes in terms of reimbursement down the road, we certainly did not say that. I think that was maybe a competitor that said that. What we had said was, we're partners.

Jereme M. Sylvain: And Jeff, to your comment on, you know, if there are any CMS changes in terms of reimbursement down the road, we certainly did not say that. I think that was maybe a competitor that said that. What we said was we're partners. And so if there are any changes in CMS reimbursement as partners, we would look at it as partners. And that would be our expectation going forward. But that was not how we positioned it. But nevertheless, you know, to the extent that these have caused frayed relationships, Kevin alluded to, we have to pay more attention to them. With your respect.

Speaker Change: And so if there's any changes in CMS reimbursement as partners, we would look at it as partners. And that would be our expectation going forward. So that was not how we positioned it. But nevertheless, you know, to the extent that those have caused frayed relationships, as Kevin alluded to, we have to pay more attention to it, irrespective.

Kevin Sayer: So that was not how we positioned it, but nevertheless, you know, to the extent that those have called for a relationship, Kevin alluded to his pay more attention to it, your respective.

Unknown Executive: Understood. Thank you.

Jereme M. Sylvain: Understood. Thank you. Your next question comes from the line of Margaret Andrew with William Blair. Your line is open.

Margaret Andrew: Your next question comes from the line of Margaret Andrew with William Blair. Your line is open. Hey, good afternoon, guys. Thanks for taking the question. I guess we just wanted to follow up and be clear on the dynamics on the guidance increase.

Speaker Change: Understood. Thank you.

Speaker Change: Your next question comes from the line of Margaret Andrew with William Blair. Your line is open.

Kevin Ronald Sayer: Hey, good afternoon, guys. Thanks for taking the question. I guess I just wanted to follow up and be clear on the dynamics of the guidance increase. You know, the way you describe it maybe wasn't super clear, at least for me.

Malgorzata Maria Kaczor Andrew: Hey, good afternoon, guys. Thanks for taking the questions.

Malgorzata Maria Kaczor Andrew: I guess I just wanted to follow up and be clear on the dynamics on the guidance increase. The way you describe it maybe wasn't super clear, at least for me. Are you assuming and continuing to assume lower new patient ads for the rest of the year? Or was that kind of new patient missing Q2 alone driving $125 million of decrease for the year? And then continuing on that thread, are you seeing any change in some of those new patient ad dynamics or rep productivity on a month-by-month basis?

Margaret Andrew: You know, the way you described me was super clearly for me. Are you assuming and continuing to send lower new patient ads for the rest of the year? Or was that kind of new patient, missing Q2 alone, driving $125 million of decrease for the year. And then, you know, continuing on that thread, are you seeing any change in some of those new patient ad dynamics or activity on the month-by-month basis that would maybe give you that confidence and recovery if that is what you're assuming.

Jereme M. Sylvain: Are you assuming and continuing to assume lower new patient ads for the rest of the year, or was that kind of new patient missing Q2 alone driving $125 million of decrease for the year? And then, you know, continuing on that thread, are you seeing any change in some of those new patient ad dynamics or rep productivity on a month-by-month basis that would maybe give you that confidence in recovery if that is what you're assuming? Yeah, it's a good question.

Speaker Change: That would maybe give you that confidence and recovery if that is what you're assuming.

Unknown Executive: Thanks. Yeah, let me, let's go to question.

Jereme M. Sylvain: Let me start on that. So Margaret, the answer is we do expect to see disruption continue into the third quarter. And that's one of the reasons why you're seeing the impact. It's really a bit of a cumulative effect. Obviously, Q2 was a big impact. You know, we've sized it in terms of patients, and it was a pretty sizable disruption relative to expectations of around 70,000 patients. So it was a pretty big number.

Unknown Executive: Let me start on that. So Margaret, the answer is we do expect to see disruption continue into the third quarter. And that's one of the reasons why you're seeing the impact. It's really a bit of a cumulative impact. Obviously, Q2 was a big impact. You know, we've sized in terms of patients. It was a pretty sizable disruption roll of tech expectations around 70,000 patients. So it was a pretty big number. Obviously, that rolls through the rest of the year. But we do expect it to take a little bit of time to recover that. And so there will be there.

Speaker Change: Yeah, it's a good question. Let me start on that. So, Margaret, the answer is we do expect to see disruption continue into the third quarter, and that's one of the reasons why you're seeing the impact. It's really a bit of a cumulative impact. Obviously, Q2 was a big impact.

Speaker Change: We've sized it in terms of patients. It was a pretty sizable disruption relative to expectation. It was around 70,000 patients, so it was a pretty big number. Obviously, that rolls through through the rest of the year, but we do expect it to take a little bit of time to recover that.

Jereme M. Sylvain: Obviously, that rolls through through the rest of the year, but we do expect it to take a little bit of time to recover that. And so there will be there; we have lowered new patient expectations into Q3. And then into Q4, our expectation is that we start to get back to where we were. But think about it as a quarter delay, effectively, as a result of some of this disruption to our longer-term plans.

Unknown Executive: We have lower new patient expectations into Q3. And then into Q4, our expectations. We start to get back to where we were.

Speaker Change: And so there will be, we have lowered new patient expectations into Q3, and then into Q4, our expectation is we start to get back to where we were, but think about it as a quarter delay, effectively, as a result of some of this disruption on our longer term plans.

Unknown Executive: But think about it as a quarter delay, effectively, as a result of some of this disruption on our longer term plans. And so when you run those numbers, plus you run some expected numbers here in Q3 in disruption relative to expectation. That's ultimately how you get to the figures. In terms of improvement over the course of time, you know, ultimately you do expect to see that, and we've seen some of that over the time now. We always expected perhaps a little bit of disruption in some recovery. I would say the disruption is bigger than we would have anticipated.

Jereme M. Sylvain: And so when you run those numbers, plus you run some expected numbers here in Q3, in disruption relative to expectation, that's ultimately how you get to the figures. In terms of improvement over the course of time, you know, ultimately, you do expect to see that. And we've seen some of that over time.

Speaker Change: And so when you run those numbers plus you run some expected numbers here in Q3 in disruption relative to expectation, that's ultimately how you get to the figures.

Kevin Ronald Sayer: Now, we always expected perhaps a little bit of disruption and some recovery. I would say the disruption is bigger than we would have anticipated, and the recovery is there.

Speaker Change: In terms of improvement over the course of time, you know, ultimately you do expect to see that and we've seen some of that over time now.

Jereme M. Sylvain: But when the disruption is bigger than anticipated, even as you have some of that recovery, again, you're a quarter behind where you'd expect to be. And I expect that to play out as we come next year. So we've revised that. We've included that in the guidance. I leveled Kevin on if you have anything to add.

Speaker Change: We always expected perhaps a little bit of disruption and some recovery. I would say the disruption is bigger than we would have anticipated. And the recovery is there, but when the disruption is bigger than anticipated, even as you have some of that recovery, again, you're a quarter behind where you'd expect to be, and I expect that to play out.

Unknown Executive: And the recovery is there, but when the disruption is bigger than anticipated, even as you have some of that recovery. Again, you're a quarter behind where you'd expect to be.

Unknown Executive: And I expect that to play out as we as we kind of exterior. So we revised that. We've included that in the guidance.

Unknown Executive: I love it, Kevin. I don't have anything to add. I think that's good.

Speaker Change: As we come next year. So we've revised that. We've included that in the guidance. I love it. Kevin, I don't know if you have anything to add. No, I think that's good.

Travis Steed: Your next question comes from the line of Travis Steed with Bank of America. Your line is open. Hey, thanks for the question. I guess maybe could you just kind of explain what is the rebate eligibility, what it is, what it means, kind of why it's temporary, you know, why it happened. I think a lot of confusion on that aspect, and I don't know if something happened kind of late in the quarter. It is like you guys, I think we're comfortable with consensus in June. So I just wanted to ask, is this all kind of come up late in the quarter?

Kevin Ronald Sayer: No, I think that's good. Your next question comes from the line of Travis Steed with Bank of America. Your line is open.

Speaker Change: Your next question comes from the line of Travis Steed with Bank of America. Your line is open.

Travis Lee Steed: Hey, thanks for the question. I guess maybe you could just kind of explain what rebate eligibility is, what it is, what it means, kind of why it's temporary, you know, why it happened. I think there was a lot of confusion on that aspect, and I don't know if something happened kind of late in the quarter. It was like you guys, I think we're comfortable with the consensus in June. So I just wanted to ask, is this all kind of coming up late in the quarter? Yeah, I can take that.

Travis Lee Steed: Hey, thanks for the question. I guess maybe, could you just kind of explain what is the rebate eligibility, what it is, what it means, kind of why it's temporary, you know, why it happened?

Speaker Change: I think a lot of confusion on that aspect. And I don't know if something happened kind of late in the quarter. You guys, I think, were comfortable with the consensus in June . So I just wanted to ask, has this all kind of come up late in the quarter?

Unknown Executive: Yeah, I can take that. So, you know, when you think about rebate eligibility, you know, over time, you kind of get closer and closer to this 100% eligibility, and it takes a little bit of time. So planned as they opt into coverage opt in. So we saw to take place over G6 still less or extend G5. We weren't really in the pharmacy then. We saw to take place over the course of G6, and when we launched G7, we assumed it happened about as twice as fast as G6. So the assumption is, is more and more folks get access.

Jereme M. Sylvain: So, you know, when you think about rebate eligibility, you kind of get closer and closer to this 100% eligibility, and it takes a little bit of time. So plans, as they opt into coverage, opt in. So we saw this take place over G6, and to a lesser extent, G5. We weren't really in the pharmacy then, but you saw it take place over the course of G6. And when we launched G7, we assumed it happened about twice as fast as G6.

Speaker Change: Yeah, I can take that. So, you know, when you think about rebate eligibility, you know, over time, you kind of get closer and closer to this 100% eligibility, and it takes a little bit of time. So plans as they opt into coverage.

Speaker Change: I'm often so we saw this take place over g6 to a lesser extent g5. We weren't really in the pharmacy then

Speaker Change: But you saw it take place over the course of G6.

Jereme M. Sylvain: So the assumption is that more and more folks get access, therefore, more and more folks are moving through that program, and therefore, you're subject to more and more rebates. And then the offset, of course, is that by having more access, you have more volumes. As you can tell by our new patient numbers, we didn't have the volumes, but also, the existing patient base was also subject to rebates. And so, effectively, it is about timing of price as you run through this.

Speaker Change: And when we launched G7, we assumed it happened about twice as fast as G6. So the assumption is, is more and more folks get access, therefore more and more folks are moving through that program, therefore you're subject to more and more rebates.

Unknown Executive: Therefore, more and more folks are moving through that program. Therefore, you're subject to more and more rebates. And then the offset, of course, is by having more access; you have more volumes. As you can tell by our new patient numbers, we didn't have the volumes, but also the existing patient base was also subject to rebates. And so effectively is about is timing of price as you run through this.

Speaker Change: And then the offset, of course, is by having more access, you have more volumes.

Speaker Change: As you can tell by our new patient numbers, we didn't have the volumes, but also the existing patient base was also subject to rebates, and so effectively is timing of price as you run through this.

Unknown Executive: It's temporal meaning you can only rebate up to your entire population, and eventually it gets there, but that's why it's a timing thing. It just happened like Kevin was alluding to three times as fast as G6, not two times as fast as G6. So that's a big piece there. In terms of the understanding of how the quarter was rolling up, you are correct. It did, it did roll up later into the second quarter. You can see our results in the second quarter, while not up to expectations. Did not impact the quarter as much as it impacted the full year.

Jereme M. Sylvain: It's temporal, meaning you can only rebate up to your entire population, and eventually, it gets there. But that's why it's a timing thing. And it just happened, like Kevin was alluding to, three times as fast as G6, not two times as fast as G6.

Speaker Change: It's temporal, meaning you can only rebate up to your entire population and eventually it gets there. But that's why it's a timing thing. It just happened, like Kevin was alluding to, three times as fast as G6, not two times as fast as G6.

Jereme M. Sylvain: So that's the big piece there. In terms of understanding how the quarter was rolling up, you are correct. It did roll up later into the second quarter.

Speaker Change: So that's the big piece there. In terms of the understanding of how the quarter was rolling up, you are correct. It did roll up later into the second quarter. You can see our results in the second quarter.

Speaker Change: While not up to expectations.

Unknown Executive: And obviously that was driven by what you saw, the dynamics that played through really the second quarter. Kevin was alluding to DME where there's a big, sorry, I'm not a big concern, a change in what I'd say is share and where we certainly missed. And that data comes in a little delayed. That's about a four to six week delay before we step, so as we, as we've tallied that data, as we're looting into really the close of the quarter. And into the weeks leading into the call, not only did it make us aware of certainly the impact on the quarter, but it was really important for us then to reflect that in the guidance on the year.

Jereme M. Sylvain: You can see our results in the second quarter, while not up to expectations, did not impact the quarter as much as they impacted the full year. And obviously, that was driven by what you saw, the dynamics that played out really in the second quarter. Kevin was alluding to DME, where there's a big, I'm sorry, not a big concern, a change in what I would say is share and where we certainly missed it. And that data comes in a little delayed. That was about a four to six week delay before we said it.

Speaker Change: Did not impact the quarter as much as it impacted the full year and obviously that was driven by what you saw the dynamics that played through really the second quarter.

Kevin: Kevin was alluding to DME, where there's a big change in, what I would say is share, and where we certainly missed. And that data comes in a little delayed. That is about a four to six week delay before we see that. So as we've tallied that data, as we're alluding into really the close of the quarter,

Jereme M. Sylvain: So as we've tallied that data, as we're alluding to the close of the quarter and into the weeks leading up to the call, not only did it make us aware of the impact on the quarter, but it was really important for us then to reflect that in the guidance for the year. And so a lot of that data, you're right, obviously took place over the course of the quarter. We became aware of it really as we closed out the quarter, but that's why it's really important to get it in front of it for the guidance for the full year. Great, thank you. Your next question comes from the line of Matt Taylor with Jeffries. Your line is open.

Kevin: and into the weeks leading into the call not only did it

Kevin: And so, those are the three key areas that make us aware of certainly the impact on the quarter. But it was really important for us then to reflect that in the guidance on the year. And so, a lot of that data, you're right, it obviously took place over the course of the quarter. We became aware of it really as we closed out the quarter. But that's why it's really important to get it in front of it for the guidance for the full year.

Unknown Executive: And so a lot of that data you're right, it obviously took place over the course of the quarter. We became aware of it really as we closed out the quarter, but that's why it's really important to get it in front of it for the guidance for the full year.

Matthew Taylor: Thank you. Your next question comes from the line of Matt Taylor with Jefferies. Your line is open. All right, thanks for taking a question.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Matt Taylor with Jeffreys. Your line is open.

Matthew Charles Taylor: Hi, thanks for taking my question. So I guess I wanted to ask if you could give us a little more color, at least qualitatively, on when you expect these issues to begin to heal, or to rebound. I don't know if you want to address them separately or together.

Matthew Taylor: So I guess I wanted to ask if you could give us a little more color, at least qualitatively, on when you expect these issues to begin to heal to rebound. I don't know if you want to address them separately or together. You've given the back app guidance, but conceptually what kind of impact this is going to have on the first half of 2025 when you're comping more normal periods.

Matthew Charles Taylor: Thanks for taking the question. I guess I wanted to ask if you could give us a little more color, at least qualitatively, on when you expect

Speaker Change: These issues to begin to heal, to rebound. I don't know if you want to address them separately or together. You've given the back-up guidance.

Speaker Change: But conceptually, what kind of impact is this going to have on the first half of 2025 when you're comping more normal periods? And when do you think you're going to see the sales force really find its footing, you know, the rebates kind of flush through? Maybe you could flush that out a little bit more to help us model the future.

Kevin Sayer: And when do you think you're going to see the field force really find its footing, the rebates kind of flush through? Maybe you could flush that out a little bit more to help us model the future. Yeah, I'll start, and again, Jereme, you can add more color. With respect to the rebates, this really caps in Q3. We'd estimated in our own models that we would have full rebate eligibility by the fourth quarter of this year. It just happened again, a couple of quarters faster than we had planned.

Kevin Ronald Sayer: You've given the backup guidance, but conceptually, what kind of impact is this going to have on the first half of 2025, when you're comping more normal periods, and when do you think you're going to see the salesforce really find its footing, you know, the rebates kind of flush through? Maybe you could flesh that out a little bit more to help us model the future. Yeah, I'll start. And again, Jereme, you can add more color.

Kevin Ronald Sayer: With respect to the rebates, this really caps in Q3. We'd estimated in our own models that we would have full rebate eligibility by the fourth quarter of this year. It's just happened again a couple of quarters faster than we had planned with respect to our field sales team and the disruption there. We believe we'll work through that in Q3 and early Q4. And by the time we start 2025, this group should be clicking on all cylinders, and things should go very well there.

Speaker Change: Yeah, I'll start. And again, Jereme, you can add more color. With respect to the rebates, this really caps in Q3. We'd estimated in our own models.

Jeremy: that we would have full rebate eligibility by the fourth quarter of this year. It just happened, again, a couple quarters faster than we had planned.

Jereme Sylvain: With respect to our field sales team and the disruption there, we believe will work through that in Q3 and early Q4. And by the time we start 2025, this group should be clicking on all cylinders, and things should go very well. There, another thing that Jereme talked about is reallocation and really examining where we're going to spend the dollars that we spend in the investments that are going to make to maximize the commercial effect of those. Those programs and those decisions are being made now. We'll roll into Q3 and to Q4. And we believe we'll set us up nicely for 2025.

Speaker Change: With respect to our field sales team and the disruption there, we believe we'll work through that in Q3 and early Q4, and by the time we start 2025, this group should be clicking on all cylinders, and things should go very well there. Another thing that Jereme talked about...

Kevin Ronald Sayer: Another thing that Jeremy talked about was reallocation and really examining where we're going to spend the dollars that we spend and the investments we're going to make to maximize the commercial effect of those. Those programs and those decisions are being made now. We'll roll into Q3, into Q4, and we believe that will set us up nicely for 2025. We're obviously not given 2025 guidance today, but we feel by the end of the year, the things that we've talked about today should have been worked through, and we should have a very good idea as to where we're going in the future. Yeah, and Kevin alluded to it earlier, you know, we talked about, the question was, how do you feel about the 2025 LRP? And is it still valid?

Jereme: is reallocation and really examining where we're going to spend the dollars that we spend and the investments we're going to make to maximize the commercial effect of those.

Speaker Change: Those programs, those decisions are being made now. We'll roll into Q3, into Q4, and we believe we'll set us up nicely for 2025. We're obviously not given 2025 guidance.

Unknown Executive: We're obviously not given 2025 guidance today. But we feel by the end of the year the things that we've talked about today, we should have worked through and we should have a very good idea. As to where we're going in the future. Yeah, and Kevin alluded to it earlier.

Jereme: Today, but we feel by the end of the year, the things that we've talked about today, we should have worked through and we should have a very good idea as to where we're going in the future.

Jereme M. Sylvain: And again, we said, Look, we feel it's still valid, albeit at the lower end of it, Matt. So I think that gives you some context. You know, obviously, this year is going to be impacted by these factors. As we work out of those and we work into them next year, Kevin alluded to it, rebates shouldn't be an issue next year. So as we work out of it and as we give, you know, as we get closer to the end of the year, we'll give 2025 guidance.

Unknown Executive: We talked about the question was, how do you feel about the 2025 LRP, and is it still valid? Again, we said, look, we feel it's still valid, albeit at the lower end of it, Matt. So I think that gives you some context. Obviously, this year is going to be impacted by these factors as we work out of those and we work into them next year. Kevin alluded to it; rebates shouldn't be an impact next year. So as we work out of it.

Kevin: Yeah, and Kevin alluded to it earlier, you know, we talked about, you know, the question was, is how do you feel about the 2025 LRP? And is it still valid? And again, we said, look, we feel it's still valid, albeit at the lower end of it, Matt. So I think that gives you some context.

Speaker Change: You know, obviously this year is going to be impacted by these factors.

Kevin: As we work out of those and we work into them next year, Kevin alluded to it, rebates shouldn't be an impact next year, so as we work out of it, as we get closer to the end of the year, we'll give 2025 guidance, but that hopefully will give you some context.

Unknown Executive: And as we give, you know, as we get closer to the end of the year, we'll give 2025 guidance, but that will give you some context to our confidence as we move out of this year into next year. And getting these things behind us, it shouldn't go unnoticed. Obviously, we're bullish on the business longer term; clearly, not happy with the quarter and certainly not happy with the revised guide. So don't, don't mistake it for that, but we do our bullish on the business longer term.

Jereme M. Sylvain: But that will give you some context to our confidence as we move out of this year into next year and get these things behind us. It shouldn't go unnoticed. Obviously, we're bullish on the business longer term, clearly not happy with the quarter, and certainly not happy with the revised guide. So don't mistake it for that.

Kevin: to our confidence as we move out of this year into next year and getting these things behind us.

Kevin: It shouldn't go unnoticed, obviously we're bullish on the business longer term, clearly not happy with the quarter and certainly not happy with the revised guide, so don't mistake it for that, but we do our bullish on the business longer term, hence the $750 million share repurchase authorization.

Unknown Executive: And the $750 million share repurchase authorization. So hopefully that helps, you know, square. I will at least think about 2025.

Kevin: So, hopefully that helps, you know, square up how we're at least thinking about 2025.

Danielle Antalffy: Thank you. Your next question comes from the line of Danielle and until see of UBS. Your line is open. Hey guys, good afternoon. Thanks so much for taking that question.

Kevin Ronald Sayer: But we do believe in the business longer term. Hence the 750 million dollar share repurchase authorization. So hopefully that helps square up how we're at least thinking about 2025. Thank you guys. Your next question comes from the line of Danielle Antalffy of UBS. Your line is open. Hey guys, good afternoon. Thanks so much for taking the question. Just a question on this pharmacy component.

Speaker Change: Thank you guys.

Speaker Change: Your next question comes from the line of Danielle Antalffy of UBS. Your line is open.

Danielle Joy Antalffy: Hey guys, good afternoon. Thanks so much for taking the question.

Danielle Antalffy: Just a question on this pharmacy component, and one of the sort of long-term risks here has always been that this becomes a more commoditized market. You look at finger sticks and blood glucose meters, and they're commoditized at this point. And when we hear things like, you know, rebates and pressure in the pharmacy, I just want to make sure I understand, you know, is this a competitive dynamic in the pharmacy as well. What's going on there and why is Q3 that Pete, where's the bottom, I guess, from a pharmacy rebate perspective, as you do broaden coverage, because this is going to be standard of care, which I still think it is.

Danielle Joy Antalffy: And one of the sort of long-term risks here has always been that this becomes a more commoditized market; you look at finger sticks and blood glucose meters, and they're commoditized at this point. And when we hear things like, you know, rebates and pressure in the pharmacy, I just want to make sure I understand, you know, is this a competitive dynamic in the pharmacy as well? What's going on there?

Danielle Joy Antalffy: Just a question on this pharmacy component, and one of the sort of long-term risks here has always been that this becomes a more commoditized market. You look at

Speaker Change: Finger sticks and blood glucose meters and they're commoditized at this point. And when we hear things like, you know, rebates and pressure in the pharmacy, I just want to make sure I understand.

Speaker Change: You know, is this a competitive dynamic in the pharmacy as well? What's going on there and why is Q3 the peak? Where's the bottom, I guess, from a pharmacy rebate perspective as you do broaden coverage? Because if this is going to be standard of care, which I still think it is,

Kevin Ronald Sayer: And why is Q3 the peak? Where's the bottom, I guess, from a pharmacy rebate perspective, as you broaden coverage, because this is going to be standard of care, which I still think it is, you know, like, what does that mean, at what price? And how should we be thinking about this over the long term? Sorry, if that didn't make it.

Danielle Antalffy: You know, like, does that mean at what price and how should we be thinking about this over the long term? Sorry if that didn't make it. No, no, it made perfect sense to me with respect to our overall pricing, our pricing within channels. When you look at the prices, remains relatively consistent. What has happened in this quarter and what has happened now. Is more and more people would become eligible for rebates, hence bringing our value per customer down. This was the price that we assumed we would be targeting at the end of the fourth quarter, and we'd be rolling into 25 with another periods.

Speaker Change: You know, like, does that mean at what price and how should we be thinking about this over the long term?

Kevin Ronald Sayer: No, no, no, it made perfect sense to me with respect to our overall pricing, our pricing within channels. When you look at the prices, it remains relatively consistent. What happened in this quarter and what has happened now is that more and more people have become eligible for rebates, hence bringing our value per customer down. This was the price that we assumed we'd be targeting at the end of the fourth quarter, and we'd be rolling into 25 with.

Speaker Change: Sorry if that didn't make a ton of sense. No, no, it made perfect sense to me. With respect to our overall pricing, our pricing within channels...

Speaker Change: When you look at the prices, it remains relatively consistent. What has happened in this quarter and what has happened now.

Speaker Change: More and more people have become eligible for rebates, hence bringing our value per customer down.

Speaker Change: This was the price that we assumed we'd be targeting at the end of the fourth quarter, and we'd be rolling into 25 with.

Unknown Executive: We haven't had anything as severe as we have today, obviously, but our new patient growth number would be so high and our volumes would be so high. If something like this happened, we grew it through it. And so if a plant like this could celebrate, our new patient numbers are so big, Danielle, that we managed through it. In this quarter, you combine the two of the increase in the rebates, which gets again to a net price very near what we'd expected and modeled. That doesn't mean the bottom of the price is falling out on an overall basis in the channel.

Kevin Ronald Sayer: In other periods, we haven't had anything as severe as we have today, obviously, but our new patient growth numbers would be so high, and our volumes would be so high. If something like this happened, we grew through it, and so if a plan like this accelerated, our new patient numbers are so big, Danielle, that we managed through it. In this quarter, you combine the two of them.

Speaker Change: In other periods, we haven't had anything as severe as we have today, obviously, but our new patient growth number would be so high, and our volumes would be so high, if something like this happened, we grew through it, and so if a plan like this could accelerate our new patient numbers are so big, Danielle.

Kevin Ronald Sayer: The increase in the rebates, which gets, again, to a net price very near what we'd expected and modeled. But that doesn't mean the bottom of the price is falling out on an overall basis in the channel. It just means more people were subject to rebates than we had before, and we shifted patients from a more profitable DME channel over to that pharmacy through some, you know, again, as I talked earlier, the three largest Medicare Advantage plans adopted pharmacy coverage this year. A lot of Medicaid plans have gone into pharmacy coverage as well.

Speaker Change: that we managed through it. And this quarter, you combine the two of them.

Speaker Change: The increase in the rebates, which gets again to a net price very near what we'd expected and modeled. That doesn't mean the bottom of the price is falling out on an overall basis in the channel, it just means

Unknown Executive: It just means more people were subject to rebates than we had before.

Unknown Executive: And we shifted patients from a more profitable DME channel over to that pharmacy through some, you know, I again, as I talked earlier, the three largest Medicare Advantage plans adopted pharmacy coverage this year. A lot of the Medicaid plans have gone to pharmacy coverage as well. So those plans moving there, you know, necessitated a bit of that movement, a bit of those rebates going up. So now we don't believe we don't believe we have a price falling out. We believe what we do continues to provide tremendous value to people and does a lot to improve health, save their lives, and all the things we've talked about forever.

Speaker Change: More people were subject to rebates than we had before and we shifted patients.

Speaker Change: from a more profitable DME channel over to that pharmacy through some...

Speaker Change: You know, again, as I talked earlier, the three largest Medicare Advantage plans adopted pharmacy coverage this year. A lot of the Medicaid plans have gone to pharmacy coverage as well.

Kevin Ronald Sayer: So those plans moving there, you know, necessitated a bit of that move and a bit of those rebates going up. So no, we don't believe we we don't believe we have a price falling out. We believe what we do continues to provide tremendous value to people and does a lot to improve health, save lives, and all the things we've talked about forever. So this is still a very valuable component in somebody's health, and it will continue to treat us. Thanks so much.

Speaker Change: So those plans moving there, you know, necessitated a bit of that move and a bit of those rebates going up. So no, we don't believe we have a price falling out. We believe what we do continues to provide tremendous value.

Speaker Change: to people and does a lot to improve health, save their lives and all the things we've talked about forever. So this is still a very valuable component in somebody's health and we'll continue to treat it as such.

Unknown Executive: So this is still a very valuable component in somebody's health, and we'll continue to treat it as such.

Joanne Wuensch: Thanks so much. Your next question comes from the line of Joanne Wenzh with City Bank. Your line is open. Good afternoon, and thanks for taking the questions.

Joanne Karen Wuensch: Your next question comes from the line of Joanne Wuensch with Citibank. Your line is open. Good afternoon, and thank you for taking the question. I'm going to pivot a little bit to Stello.

Speaker Change: Thanks so much.

Speaker Change: Your next question comes from the line of Joanne Wuensch with Citibank. Your line is open.

Kevin Ronald Sayer: It was 1% of your 24 revenue at one level, and it's still 1% of your 24 revenue, which has been lowered by a couple hundred million. Does this indicate a change in your expectations for the year or anything that we should read into it? I'm just sort of a little curious about that.

Joanne Wuensch: I want to pivot a little bit to Stella. It was 1% of your 24 revenue at one level, and it's still 1% of your 24 revenue, which has been lowered by a couple hundred million. And does this indicate you're a change in your expectations for the year or anything that we should read into it. I'm just sort of a little curious about that and anything else that you can share as I think about that is building revenue. Thanks. No, you know, it's it's an integer. And so the whole point there is, is yes, while the top has come down 1%: 43 versus 40.

Joanne Karen Wuensch: Good afternoon, and thank you for taking the question. I want to pivot a little bit to Stello. It was 1% of your 24 revenue at one level, and it's still 1% of your 24 revenue, which has been lowered by a couple hundred million.

Speaker Change: Does this indicate a change in your expectations for the year or anything that we should read into it? I'm just sort of a little curious about that and anything else that you can share as you think about that is building revenue. Thanks.

Jereme M. Sylvain: And anything else that you can share as you think about that is building revenue. No, you know, it's an integer. And so the whole point there is, is yes, while the top has come down 1%, 43 versus 40. You know, at the end of the day, it was all that kind of general contribution. So there was nothing insinuated by that, Joanne, it was just, it's rounded to that integer.

Speaker Change: No, you know, it's an integer. And so the whole point there is, yes, while the top has come down.

Unknown Executive: You know, at the end of the day, it was all that kind of general contribution. So there was nothing insinuated by that. Joanne, it was, it's just, it's rounded to that integer.

Speaker Change: 1%, 43 versus 40, you know, at the end of the day, it was all that kind of general contribution. So there was nothing insinuated by that, Joanne, it was, it's just, it's rounded to that integer.

Matthew O'brien: Thanks. Your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open. All right, afternoon.

Jereme M. Sylvain: Thanks. Your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open. All right, afternoon.

Speaker Change: Thanks.

Speaker Change: Your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open.

Matthew Charles Taylor: Thanks for taking the question. And it is one question, but it's, it's long enough, and I'll tie it all together, I promise. Just clearly, Kevin, your comment about next year's LRP. Do you mean the 15% growth? Or do you mean 4.6 billion at the low end?

Unknown Executive: Thanks for taking the question, and it is one question, but it's long enough, and I'll title together a promise. Just clearly, Kevin, you're coming about next year and standing in the LRP. Do you mean the 15% growth, or do you mean 4.6 billion at the low end? Because if it's 4.6 off of 4.057, that's 12% growth. And then, you know, within there, the low end of the range 15% off of even a, you know, 12% number this year is, you know, is a deceleration versus, or is it easier cop? So there is a deceleration still factored in there.

Matthew O'brien: All right, afternoon. Thanks for taking the question, and it is one question, but it's long enough, and I'll tie it all together, I promise.

Kevin Ronald Sayer: Because if it's 4.6 off of 4.057, that's 12% growth. And then, you know, within that range, the low end of the range, 15% off of even a 12% number this year is, you know, a deceleration versus, or is it an easier comp? So there's, is a deceleration still factored in there? So what has changed to get us from the kind of 17 and a half percent growth we expect from you guys, you know, typical growth rate guidance to now this more like 15% or even lower?

Matthew O'brien: Just clearly, Kevin, your comment about next year's LRP, do you mean the 15% growth or do you mean $4.6 billion at the low end because if it's $4.6 off of $4.57, that's 12% growth.

Speaker Change: And then, you know, within there, the low end of the range, 15% off of even a, you know, 12% number this year is, you know, is a deceleration versus, or is it easier comp, so there's, is a deceleration still factored in there? So, what has changed?

Unknown Executive: So what has changed to get us from the kind of 17.5% growth we expect from you guys, you know, typical growth rate guidance to now this more like 15% or even lower. What's the difference there that we can really anchor on to because that's I think the biggest challenge for the stock is to think about how it'll trade tomorrow.

Speaker Change: To get us from the kind of 17.5% growth we expect from you guys, you know, typical growth rate guidance to now this more like 15% or even lower.

Kevin Ronald Sayer: What, what's the difference there that we can really anchor on to? Because that's, I think, the biggest challenge for the stock as we think about how it will trade tomorrow. Sure, maybe I can start with the maybe next year question.

Speaker Change: What's the difference there that we can really anchor on to because that's, I think, the biggest challenge for the stock as we think about how it will trade tomorrow. Thank you.

Kevin Sayer: Thank you. Sure, maybe I can start with the maybe the next year question. I don't think we've necessarily guided to a number. What we really tried to do is say, here's our LRP. It's still in play when I say to the lower end. It's not necessarily the low end or a point estimate within there. It's really to give some context to as we've already made plans and are looking at next year. You know, we have some, there's confidence in meeting that low end number. And so really that's really what the goal here is, rather than the set a guide number.

Jereme M. Sylvain: I don't think we've necessarily guided to a number. What we really tried to do is say, "Here's our LRP. It's still in play."

Speaker Change: Sure, maybe I can start with the maybe the next year question. I don't think we've necessarily guided to a number. What we really tried to do is say, here's our LRP, it's still in play. And when I say to the lower end, it's not.

Jereme M. Sylvain: And when I say to the lower end, it's not necessarily the low end or a point estimate within there. It's really to give some context to, as we've already made plans and are looking at next year, you know, we have some confidence in meeting that low end number. And so really, that's really what the goal here is, rather than to set a guide number. Now, your question then comes back to, which is this year's growth, which the organic growth number, obviously, 11 to 13% is lower than we've historically seen.

Speaker Change: The necessarily the low end or a point estimate within there.

Speaker Change: It's really to give some context to, as we've already made plans and are looking at next year, you know, we have some, there's confidence in meeting that low-end number. And so, really, that's really what the goal here is, rather than to set a guide number.

Jereme Sylvain: Now, your question then coming back to which is this year's growth, which the organic growth number, obviously 11 to 13%, is lower than we've historically seen. Kevin's alluded to it a little bit in the script this year, a little bit of what I would say is, you know, execution where I think we need to execute better on new patients and execute better, you know, in various channels. And so that's something as a team. We have to get our arms around this year was impacted by a quicker, as we mentioned, a quicker rebate dynamic than we then we expected.

Speaker Change: Now, your question then coming back to which is this year's growth, which the organic growth number obviously 11 to 13% is lower than we've historically seen.

Jereme M. Sylvain: Kevin's alluded to it a little bit in the script this year, but a little bit of what I would say is, you know, execution, where I think we need to execute better on new patients and execute better, you know, in various channels. And so that's something, as a team, we have to get our arms around. This year was impacted by a quicker rebate dynamic than we expected, and that's part of it. Obviously, we lapped that next year, and you can only rebate 100% of your units. So, obviously, it stops at some point.

Speaker Change: Kevin's alluded to it a little bit in the script. This year, a little bit of what I would say is, is, you know, execution, where I think we need to execute better on new patients and execute better, you know, in various channels. And so that's something as a team, we have to get our arms around.

Speaker Change: This year was impacted by a quicker, as we mentioned, a quicker rebate dynamic.

Jereme Sylvain: And that's a part of it. Obviously, we lap that next year, and you can only rebate 100% of your units. So obviously it stops at some point. And so, and so that that piece of it will be transitory. But I think the big key then is getting back to execution and execution on new patients and executing in the DME channel and making sure we have good partnership there and executing on our channel mix. That's really the work we have to do.

Speaker Change: Then we expected...

Speaker Change: And that's a part of it. Obviously, we lapped that next year, and you can only rebate 100% of your units. So obviously, it stops at some point.

Speaker Change: And so that piece of it will be transitory, but I think the big key then is getting back to execution, and execution on new patients, and executing in the DME channel, and making sure we have good partnerships there, and executing on our channel mix.

Jereme Sylvain: And back to that point, that's one of the reasons we had a little bit of a lapse here, and to the extent that we can get back to it, that allows us to get back to what we hope is what our traditional performance has been.

Speaker Change: That's really the work we have to do, and back to that point, that's one of the reasons we had a little bit of a lapse here, and to the extent that we can get back to it, that allows us to get back to what we hope is what our traditional performance has been.

Mary Thibault: Your next question comes from the line of Mary Thibault with BTIG. Your line is open. Hey, good afternoon. This is Sam on for Marie. Thanks for taking the questions here. Maybe I can ask on the DME channel. You know, I recall when you guys were making that shift a few years ago, that volume would peak around 20%. I guess it's the right way to think about a closer to 15% now. And then, as we think about more, I may plan shifting a pharmacy. I mean, is there any risk that that could go even lower? Thanks for taking the questions.

Jereme M. Sylvain: And so that piece of it will be transitory. But I think the big key then is getting back to execution and execution on new patients and execution in the DME channel and making sure we have good partnerships there and execution across our channel mix. That's really the work we have to do. And back to that point, that's one of the reasons we had a little bit of a lapse here. And to the extent that we can get back to it, that allows us to get back to what we hope is what our traditional performance has been. Your next question comes from the line of Marie Thibault with BTIG. Your line is open. Hey, good afternoon. This is Sam on for Marie.

Speaker Change: Your next question comes from the line of Marie Thibault with BTIG. Your line is open.

Sam: Thanks for taking the questions here. Maybe I can ask on the DME channel. I recall when you guys were making that shift a few years ago, that volume mix would peak around 20%. I guess it's the right way to think about it closer to 15% now. And then, as we think about more MA plans shifting to pharmacy, I mean, is there any risk that that could go even lower?

Speaker Change: Hey, good afternoon. This is Sam on for Marie. Thanks for taking the questions here.

Sam: Maybe I can ask on the DME channel, you know, I recall when you guys were making that shift a few years ago, that volume mix, you know, would peak around 20%. I guess is the right way to think about it closer to 15% now. And then as we think about more MA plant shifting of pharmacy, I mean, is there any risk that that could go even lower? Thanks for taking the questions.

Mary Thibault: Yeah, you know, we had always kind of got at least in the commercial channels, and we talked this is really a more about the commercial channels. We had always assumed it'd be about 75:25. That was kind of our crystal ball. And as we got there, you know, it started to skew a little bit more. But it was, it didn't drift off of that 75-25 all that much. However, this quarter, as we started to see really what I would say is a loss of share, which for us in that channel is a bit unique. And something we got to get our arms around the split in our business was a little more.

Sam: Thanks for taking the questions. Yeah, you know, we had always kind of assumed, at least in the commercial channels, and we talked, this is really more about the commercial channels. We had always assumed it'd be about 75-25.

Speaker Change: Yeah, you know, we'd always kind of got, at least in the commercial channels, and we talked, this is really more about the commercial channels.

Jereme M. Sylvain: That was kind of our crystal ball. And as we got there, you know, it started to skew a little bit more. But it was, it wasn't, it didn't drift off of that 75-25 all that much.

Speaker Change: We had always assumed it'd be about 75-25.

Speaker Change: That was kind of our crystal ball. And then as we got there, you know, it started to skew a little bit more, but it was, it was, it didn't drift off of that 75, 25.

Jereme M. Sylvain: However, this quarter, as we started to see really what I would say is a loss of share, which for us in that channel is a bit unique and something we got to get our arms around, the split in our business was a little more. But it doesn't necessarily mean that the overall market split ultimately ends up that way. But it does mean that the shift of our business has certainly shifted that way. And so does that number shift down to 85-15? Well, if we take a share, no. And that's really on us. So that gets back to the execution question; we need to execute on that channel.

Speaker Change: All that much.

Speaker Change: However, this quarter, as we started to see really what I would say is loss of share, which for us in that channel is a bit unique.

Unknown Executive: It doesn't necessarily mean that the overall market split ultimately ends up that way, but it does mean that the shift of our business certainly shifted that way. And so does that number shift down to 85 15? Well, if we take share, no. And that's really on us.

Speaker Change: and something we got to get our arms around.

Speaker Change: The split in our business was a little more.

Speaker Change: It doesn't necessarily mean that the overall market split ultimately ends up that way.

Speaker Change: But it does mean that the shift of our business certainly shifted that way. And so does that number shift down to 85-15? Well, if we take share, no. And that's really on us. So that gets back to the execution question. We need to execute in that channel. And that channel, it's a very important channel for us. And these are very important partners. And they serve a very, very important partnership to our customers.

Unknown Executive: So that's a get back to the execution question. We need to execute in that channel on that channel. It's a very important channel for us. And these are very important partners, and they serve a very, very important partnership to our customers. And so we've got to get back into that channel and make sure that we're getting our fair share there. That's really the big driver.

Jereme M. Sylvain: And that channel, it's a very important channel for us, and these are very important partners. And they serve a very, very important partnership to our customers. And so we've got to get back into that channel and make sure that we're getting our fair share there. That's really the big driver. I'd also add, though, that there has been a shift in government payer activity from the DME channel to the pharmacy. That actually has happened.

Speaker Change: And so we've got to get back into that channel and make sure that we're getting our fair share there. That's really the big driver. I'd also add, though, there has been a shift in government payer activity from the DME channel to the pharmacy. That actually has happened, and we have to figure out how much that has impacted.

Unknown Executive: I also had no there has been a shift in government pay or activity from the damage each out to the pharmacy. That actually has happened, and we have to figure out how much that has impacted. Excuse me, our DME mix versus pharmacy mix as well.

Speaker Change: excuse me our DME mix versus pharmacy mix as well

Matthew Blackman: Thank you for taking the questions. Your next question comes from the line of Matthew Blackman with Stifle. Your line is open. Good afternoon, everybody. Can you hear me? Okay. Okay, great.

Kevin Ronald Sayer: And we have to figure out how much that has impacted, excuse me, RDME mix versus pharmacy mix as well. Thank you for taking the question. Your next question comes from the line of Matthew Blackman with Stiefel. Your line is open. Good afternoon, everybody. Can you hear me OK?

Speaker Change: Thank you for taking the questions.

Speaker Change: Your next question comes from the line of Matthew Blackman with Stiefel. Your line is open.

Matthew Stephan Miksic: Thank you. Okay, great. Maybe Jereme, I think I heard you mention that the new patient shortfall was something in the neighborhood of 70,000. Is there any way to tease that out?

Mathew Justin Blackman: Good afternoon, everybody. Can you hear me okay?

Matthew Blackman: Maybe, Jeremy, I think I heard you mention that the new patient shortfall was something in the neighborhood of 70,000. Is there any way to tease that out? I'm sure it's challenging by indication. I mean the DME share while it sounds like it may be skewed more to basal patients, potentially. Is that fair? And then what about on the Salesforce dislocation? Does any help on sort of the different pieces of the business? Yeah, you know, so the 70,000 way to think about it is there's a good chunk of that that is OUS. And so there's a portion that's outside the United States.

Speaker Change: Thank you.

Mathew Justin Blackman: Okay, great. Jereme, I think I heard you mention that the new patient shortfall was something in the neighborhood of 70,000.

Jereme M. Sylvain: I'm sure it's challenging by indication. I mean, the DME share loss sounds like it maybe is skewed more to basal patients, potentially. Is that fair?

Mathew Justin Blackman: Is there any way to tease that out? I'm sure it's challenging by indication. I mean, the DME share, while it sounds like it maybe is skewed more to basal patients, potentially, is that fair? And then what about on the Salesforce dislocation? Is there any help on sort of the different pieces of the business?

Jereme M. Sylvain: And then what about the Salesforce dislocation? Just any help on sort of the different pieces of the business? Yeah, you know, so the 70,000, the way I think about it is there's a good chunk of that that is outside the United States. And so there's a portion that's outside the United States, there's a portion that's inside the United States, and it's usually reflective of our patient base in total. So you kind of have our splits there. In the US, you know, really, a lot of it is driven by, you know, the Salesforce.

Speaker Change: Yeah, you know, so the 70,000 way to think about it is there's a good chunk of that that is OUS. And so there's a portion that's outside the United States, there's a portion that's inside the United States, and it's usually reflective of our patient base in total. So you kind of have our splits there.

Jereme Sylvain: There's a portion that's inside the United States, and it's usually reflective of our patient base in total. So you kind of have our splits there. In the US, you know, really a lot of it is driven by, you know, the Salesforce. Now, one of the challenges, of course, is the Salesforce services all different indications. And so, as you service all in different indications, you could probably imagine if we're not doing well in the DME. It gets back to your point. We're not doing wonderful in the basal space. That's a big piece of the DME, certainly DME Medicare, in the patient base that they service.

Mathew Justin Blackman: In the U.S.

Jereme M. Sylvain: Now, one of the challenges, of course, is that Salesforce services all different indications. And so as you service all different indications, you can probably imagine if we're not doing well in the DME, it gets back to your point. We're not doing wonderful in the basal space. That's a big piece of the DME, certainly DME Medicare, and the patient base that they service. So that's the way you know it's really hard to parse out by category.

Mathew Justin Blackman: You know, really, a lot of it is driven by, you know, the, the, the Salesforce. Now, one of the challenges, of course, is the Salesforce services all different indications.

Mathew Justin Blackman: And so, as you service all in different indications, you could probably imagine if we're not doing well in the DME, it gets back to your point, we're not doing wonderful in the basal space, that's a big piece of...

Jereme Sylvain: So, that that's the way; you know, it's really, it's really hard to parse out by category. But when we look into it and we say, gee, we're not doing. We're not taking share in the DME space. You can presume that a lot of that is in that Medicare space. And I think it is fair to say that, you know, really across the board disruption. You can assume there's a little bit really across the board, but the biggest piece there by the best way to put it. Yeah, I appreciate that.

Mathew Justin Blackman: The DME, certainly DME Medicare and the patient base that they service.

Jereme M. Sylvain: But when we look into it, and we say, gee, we're not doing, we're not taking share in the DME space, you can presume that a lot of that is in the Medicare space. And I think it is fair to say that, you know, really across the board disruption. You can assume there's a little bit really across the board, but the biggest piece there, by the best way to put it. Yeah, I appreciate that. Thanks. Your next question comes from the line of Jayson Bedford with Raymond James. Your line is open. Thanks. Just two quick ones.

Mathew Justin Blackman: So that that's the way you know it's really it's really hard to parse out by category but when we look into it and we say gee we're we're not doing we're not taking share in the DME

Mathew Justin Blackman: space, you can presume that that a lot of that is in that Medicare space. And I think it is fair to say that, you know, really across the board disruption, you can assume there's a little bit really across the board, but the biggest piece there by the best way to put it. Yeah, I appreciate that. Thanks.

Jason Bedford: Your next question comes from the line of Jason Bedford with Raymond James. Your line is open. Thanks. Just two quick ones.

Mathew Justin Blackman: Your next question comes from the line of Jayson Bedford with Raymond James. Your line is open.

Jayson Tyler Bedford: I appreciate the color on the installed base, but can we assume there's no real, notable change in attrition? And then just on the 3Q guidance, is there not a healthy contribution from Stelo in 3Q, or is the 40 million more fourth quarter weighted? Yeah, this is Kevin.

Jason Bedford: Appreciate the color on the installed base, but can we assume there's no, there's been no real notable change in attrition. And then just on the three two guidance, is there not a healthy contribution from Stella in 3Q or the 40 million more fourth quarter weighted? Yeah, this Kevin the, the Stella guidance, the Q3 contribution is not overly large. Most of the Stella revenue is fourth quarter rated weighted as we, again, planned to launch Stella in later August. So that is, that's how that would work with respect to attrition. Our retention attrition by patient category remains similar to what we had in our plans.

Jayson Tyler Bedford: Thanks, just two quick ones. Appreciate the color on the installed base, but can we assume there's no, there's been no real notable change in attrition? And then just on the 3Q guidance, is there not a healthy contribution from Stelo in 3Q or is the 40 million more fourth quarter weighted?

Kevin Ronald Sayer: The Stelo guidance, the Q3 contribution is not overly large. Most of the Stelo revenue is fourth quarter rated, weighted as we, again, plan to launch Stelo in later August. So that is, that's how that one works. With respect to attrition, our retention and attrition by patient category remains similar to what we had in our plan.

Jayson Tyler Bedford: Yeah, this is Kevin. The Stelo guidance, the Q3 contribution is not overly large. Most of the Stelo revenue is fourth quarter rated, weighted as we again plan to launch Stelo in later August . So that is...

Speaker Change: That's how that one works. With respect to attrition, our retention and attrition by patient category remains similar to what we had in our plans.

Kevin Ronald Sayer: We know that our, you know, our Type 1 patient with an automated insulin delivery system is certainly our stickiest patient and patient with the highest utilization factors as we go down the acuity curve to people on MDI or basal users or even those who are non-insulin users. Utilization goes down, but our retention numbers are still industry standard by a very large margin, and so we're still doing very well there. Your next question comes from the line of Steve Lichtman with Oppenheimer. Your line is open.

Kevin Sayer: We know that our, you know, our type 1 patient with a non made insulin billers system is certainly our stickiest and patient with the highest utilization factors. As we go down the acuity curve to people on MDI or basal users or even those who are non non insulin users, utilization goes down, but our attention numbers are still industry standard by a very large margin.

Speaker Change: We know that our you know our type 1 patient with an automated insulin delivery system is certainly our stickiest and patient with the highest utilization factors as we go down the acuity curve to people on MDI or basal users or even those who are non-insulin users.

Speaker Change: Utilization goes down but our retention numbers are still industry standard by a very large margin and so we're still doing very well there.

Kevin Sayer: And so we're still doing very well there.

Unknown Executive: Your next question comes from the line of Steve Lakeman with Oppenheimer; your line is open. Thank you. You see, you know, with this larger sales horse that, you know, obviously can turn this into a positive ultimately. We are seeing things beginning to stabilize, but we're also seeing things slower than we projected in our own internal models at the start of the year. And as we developed our guidance earlier, Hans says Jeremy said the guidance coming down a bit. So we are seeing things beginning to stabilize, and they're stabilizing across different categories and geographies.

Speaker Change: Your next question comes from the line of Steve Lichtman with Oppenheimer. Your line is open.

Steven Michael Lichtman: Thank you. I wanted to ask again about the Salesforce integration and just where you are today. Are you seeing signs of stabilization now? And what are you assuming on that front for the guide?

Steven Michael Lichtman: Thank you. I wanted to ask again about the Salesforce integration and just where you are today. Are you seeing signs of stabilization?

Speaker Change: Now, um, and what are you assuming on that front for the guide? And then can you remind us what opportunities you see, you know, with this larger sales force, that, you know, obviously can turn this into a, to a positive ultimately.

Kevin Ronald Sayer: And then can you remind us what opportunities you see, you know, with this larger Salesforce, that, you know, obviously can turn this into a positive? We are seeing things beginning to stabilize, but we're also seeing things slower than we projected in our own internal models at the start of the year. And as we developed our guidance earlier, hence, as Jereme said, the guidance coming down a bit. So we are seeing things begin to stabilize, and they're stabilizing across different categories and geographies.

Speaker Change: We are seeing things beginning to stabilize, but we're also seeing things slower than we projected in our own internal models at the start of the year, and as we developed our guidance earlier, and as Jereme said, the guidance

Speaker Change: Coming down a bit. So we are seeing things begin to stabilize, and they're stabilizing across different categories and geographies. I think the biggest thing to anticipate for us, and one of the things we missed in our plans, we've sent a whole bunch of new reps into offices we've never called on before.

Kevin Ronald Sayer: I think the biggest thing to anticipate for us, and one of the things we missed in our plans, is that we've sent a whole bunch of new reps into offices we've never called on before, and there's a get to know you period that we probably didn't estimate being long enough. And so we're taking steps to assist our team and better communicate with those physicians and get to know them, and get them to trust and use Dexcom.

Unknown Executive: I think the biggest thing to anticipate for us and one of the things class we missed in our plans. We've sent a whole bunch of new reps into offices we've never called on before. And there's a get-to-know-you period that we probably didn't estimate being long enough. And so we're taking steps to assist our team and better actions with those physicians and getting to know them and getting them to trust and use Dexcom. You know, somebody hasn't prescribed Dexcom. They've got to prescribe one to see how it goes. And we've been going through that cycle during this quarter.

Speaker Change: And there's a get-to-know-you period that we probably didn't estimate being long enough.

Speaker Change: And so we're taking steps to assist our team and

Kevin Ronald Sayer: You know, somebody who hasn't prescribed Dexcom, they've got to prescribe one to see how it goes, and we've been going through that cycle uh, during this quarter, and we should be able to increase the prescription patterns of those new positions a lot more going forward, but there was a lot of, "Getting to know you," for lack of a better word, going on here in the second quarter as this group got out We'll have a lot more data at the end of the third quarter. We saw better interactions in May and June, and we'll see how things go from here on out. Thank you. Your next question comes from the line of Mike Polark with Wolf Research. Your line is open.

Speaker Change: Better interactions with those physicians and and getting to know them and getting them to trust and use Dexcom You know somebody hasn't prescribed Dexcom. They've got to prescribe one to see how it goes

Unknown Executive: And we should be able to increase the prescription patterns of those new positions a lot more going forward, but there was a lot of. Getting to know you, for lack of a better word, going on here in the second quarter of this group got out there. We'll have a lot more day at the end of the third quarter. We saw better interactions in May and June. And we'll see how things go from here on out. Thank you.

Speaker Change: And we've been going through that cycle during this quarter, and we should be able to increase the prescription patterns of those new positions a lot more going forward. But there was a lot of...

Speaker Change: Getting to know you, for lack of a better word, going on here in the second quarter as this group got out there. We'll have a lot more data at the end of the third quarter. We saw better interactions in May and June . And we'll see how things go from here on out.

Mike Polark: Your next question comes from the line of Mike Polark with Wolf Research.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Mike Polark with Wolf Research. Your line is open.

Mike Polark: Your line is open. Hey, thank you. I want to ask on your relationship with distributors in the concept of stocking last year. Obviously was a big year with the G7 launch and the Basal coverage expansion. And there's always a lot of stuff going on.

Michael K. Polark: Hey, thank you. I want to ask you about your relationship with distributors and the concept of stocking. Last year, obviously, was a big year with the G7 launch and the Basel coverage expansion. And there's always a lot of stuff going on in OUS. Is there any, as you look back at 23 as the baseline for building 24, would you frame any kind of this setback as stocking last year that kind of, [inaudible] Yeah, you know, usually you have these challenges when you launch a product given, you know, inventory levels of the old and inventory levels of the new.

Michael K. Polark: Hey, thank you. I want to ask on your relationship with distributors and the concept of stocking. Last year, obviously, was a big year with the G7 launch and the Basel coverage expansion, and there's always a lot of stuff going on OUS.

Kevin Sayer: As you look back at 23 as the baseline for building 24, would you frame any of kind of this setback as stocking last year that kind of caused the sense of who you're modeling or this year if you can comment on inventory levels with key partners. Is there are you observing a drawdown of inventory? If there's anything to frame around that, I'd appreciate the color. Yeah, you know, if anything, usually you have these challenges when you launch a product given. In inventory levels of the old and inventory levels of the new, in all fairness to our partners, last year they did a pretty good job of balancing G6 and G7 inventory levels as they went through their transition, so we didn't have a whole lot in the prior year.

Speaker Change: Is there any, as you look back at 23 as the baseline for building 24, would you frame any of, kind of, this setback as stocking last year? That, that kind of...

Speaker Change: cause the snafu in your modeling? Or this year, if you can comment on inventory levels with key partners, are you observing a drawdown of inventory? If there's anything to frame around that, I'd appreciate the color.

Michael K. Polark: In all fairness to our partners last year, they did a pretty good job of balancing G6 and G7 inventory levels as they went through their transition. So we didn't have a whole lot in the prior year. This year, it's pretty normal.

Speaker Change: Yeah, you know, if anything, usually you have these challenges when you launch a product given, you know, inventory levels of the old and inventory levels of the new.

Speaker Change: In all fairness to our partners last year, they did a pretty good job of balancing G6 and G7 inventory levels as they went through their transition, so we didn't have a whole lot.

Kevin Sayer: This year it's pretty normal and we have inventory levels that generally range in between, you know, pretty normal levels we keep an eye on what's in the channel and they always stay within this this really relatively tight band and when we keep it we keep it in that band intentionally and so we've been in that band now and we hope we generally stay in that band.

Speaker Change: in the prior year.

Speaker Change: This year, it's pretty normal, and we have inventory levels that generally range in between, you know, pretty normal levels. We keep an eye on what's in the channel, and they always stay within this really relatively tight band. And we keep it in that band intentionally, and so we've been in that band now, and we generally stay in that band.

Jereme M. Sylvain: And we have inventory levels that generally range in between, you know, pretty normal levels; we keep an eye on what's in the channel, and they always stay within this really relatively tight band. And when we keep it, we keep it in that band intentionally. And so we've been in that band now for a while. And we've generally stayed in that band. I don't I don't recall a time we were outside that band, quite frankly.

Kevin Sayer: I don't recall a time we've been outside that band, quite frankly, and so nothing to call out specifically. The bigger issue, and I get we are getting at the bigger issue, would have been, say, last year. During a window when you had a launch of G7 and folks were gearing up, given not sure how much you know demand would come in, we didn't really have that last year and again kudos to everybody that was holding inventory. That is a nice job.

Speaker Change: I don't recall a time we've been outside of that band, quite frankly. And so, nothing to call out specifically. The bigger issue, and I get what you're getting at, the bigger issue would have been, say, last year.

Speaker Change: during a window when you had a launch of G7 and folks were gearing up given not sure how much demand would come in. We didn't really have that last year. And again, kudos to everybody that was holding inventory. They did a nice job.

Unknown Executive: Thank you.

Shagun Chadha: Your next question comes from the line of Shagun Singh with RBC Capital Markets. Your line is open. Great, thank you so much for taking the question. Just to follow up on the sales force disruption here, you said it was more disruptive than historically because you changed roles, so can you elaborate on that? And then you talked about physicians changing physicians people are calling on, so is this, are you referring to the PCP channel? And then, you know, you also referred to longer time to productivity. Can you give us a sense of how long does it take to get fully productive?

Jereme M. Sylvain: And so nothing to call out specifically, the bigger issue, and I get what you're getting at the bigger issue would have been, say, last year, during a window when you had the launch of G7, and folks were gearing up given not sure how much, you know, demand would come in. We didn't really have that last year.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Shagun Singh with RBC Capital Markets. Your line is open.

Jereme M. Sylvain: And again, kudos to everybody that was holding inventory that did a nice job. Thank you. Your next question comes from the line of Shagun Singh with RBC Capital Markets. Your line is open.

Speaker Change: Great. Thank you so much for taking the question. Just to follow up on the Salesforce disruption here, you said it was more disruptive than historically because you changed roles. So can you elaborate on that? And then you talked about physicians, changed physicians people are calling on. So is this, are you referring to the PCP channel? And then, you know, you also referred to longer time to productivity. Can you give us a sense of how long does it take to get fully productive? You know, it sounds like, you know, about two quarters or so, because you said you expect, you know, them to be fully productive, you know, getting into 2025. So, you know, is that the case? And then just finally, can you give us an update on the extended wear?

Shagun Chadha: You know, it sounds like you know about two quarters or so because you said you expect, you know, them to be fully productive, you know, getting into 2025. So, you know, is that the case? And then, just finally, can you give us an update on the extended where? Thank you.

Kevin Sayer: You know I was waiting for a science question, so I'll start with extended where we've been committed to launching a 15-day product in 2025, and we intend to. Things are progressing well on that front. Still, will be a 15 a product as well. We will learn a great deal from still with our launch and how that goes with respect to the sales team. Again, that reorganization is much different than what we've done in the past. What we've done in the past is we were looking at area and this total sales volume in an area in the physicians there and kind of just divided up geographically and made various sub areas.

Shagun Singh Chadha: Great. Thank you so much for taking the time to answer the question. Just to follow up on the Salesforce disruption here, you said it was more disruptive than historically because you changed roles. So can you elaborate on that? And then you talked about physicians, changed physicians people are calling on. So is this, are you referring to the PCP channel? And then, you know, you also refer to a longer time to productivity. Can you give us a sense of how long it takes to get fully productive?

Speaker Change: Thank you.

Speaker Change: You know, I was waiting for a science question, so I'll start with extended wear. We've been committed to launching a 15-day product in 2025, and we intend to.

Kevin Ronald Sayer: You know, it sounds like, you know, about two quarters or so because you said you expected them to be fully productive, you know, getting into 2025. So, you know, is that the case? And then, just finally, can you give us an update on the extended wear? Thank you.

Kevin Ronald Sayer: So I'll start with extended wear. We've been committed to launching a 15-day product in 2025. And we intend, Things are progressing well on that front. Stelo will be a 15-day product as well.

Speaker Change: Things are progressing well on that front. Stella will be a 15-day product as well. We will learn a great deal from Stella with our launch and how that goes.

Kevin Ronald Sayer: We will learn a great deal from Stelo with respect to our launch and how that goes. With respect to the sales team, again, that reorganization is much different than what we've done in the past. What we did in the past is we would look at an area and the total sales volume in an area and the physicians there and kind of just divide it up geographically and make various sub-areas. So the reps in those areas would call endocrinologists and primary care physicians, and primarily, their efforts were focused on those that were the highest prescribers in the territory.

Speaker Change: With respect to the sales team, again, that reorganization is much different than what we've done in the past. What we've done in the past is we would look at an area...

Speaker Change: and the total sales volume in an area and the physicians there and kind of just divided up geographically and make various sub areas. So the reps in those areas would call an endocrinologist and primary care physicians and primarily their efforts were focused on those that were the highest prescribers in the territory.

Kevin Sayer: So the reps and those areas would call an endocrinologist and primary care physicians, and primarily their efforts were focused on those that were high, the highest prescribers in the territory. What we did this time is we took our territories and we said okay we are going to have specialty reps and one force who calls primary on the primarily on the high prescribing physicians, endocrinologist, and hyper-scribing primary care doctors who are very familiar with the product and service them more in that type of a role. And that's one group of our sales force. Then we have more people who are prospecting, who are going down and talking to more of PCPs who don't prescribe as much product, places where we have not been before. Because what we've noted in our data is we obviously don't win in offices we don't call on.

Kevin Ronald Sayer: What we did this time is we took our territories and we said, okay, we are going to have specialty reps who call primarily on the high prescribing physicians, endocrinologists, and high prescribing primary care doctors who are very familiar with the product and serve them more in that type of a role. And that's one group of our sales force. Then we have more people who are prospecting, who are going down and talking to more PCPs who don't prescribe as much product, places where we have not been before, because what we've noted in our data is we obviously don't win in offices we don't call on.

Speaker Change: What we did this time is we took our territories and we said, okay, we are going to have specialty reps.

Speaker Change: OneForce who calls primarily on the high prescribing physicians, endocrinologists and high prescribing primary care doctors who are very familiar with the product and service them more in that type of a role.

Speaker Change: And that's one group of our sales force. Then we have more people who are prospecting, who are going down and talking to more of PCPs who don't prescribe as much product, places where we have not been before.

Kevin Sayer: and so we needed to get into those offices and develop relationships. A lot of the time that has been spent in the first, you know, in this first quarter and going forward in Q3 is beginning to develop and cultivate those relationships so we can get prescriptions from those healthcare professionals. They need to learn to trust us, and they need to learn to and have some experiences with our products. So that is how that is going, and that is why this is different. So we really did things differently than we've done in the past. We believe over the long term, it's absolutely the right thing to do, and we have confidence in this team that they'll work through this.

Speaker Change: Because what we've noted in our data is we obviously don't win in offices we don't call on.

Kevin Ronald Sayer: So we needed to get into those offices and develop relationships. A lot of the time that has been spent in the first, you know, this first quarter and going forward in Q3 is beginning to develop and cultivate those relationships so we can get prescriptions from those healthcare professionals. They need to learn to trust us, and they need to learn to, and have some experiences with our products.

Speaker Change: And so we needed to get into those offices and develop relationships.

Speaker Change: A lot of the time that has been spent in the first...

Speaker Change: You know, in this first quarter and going forward in Q3.

Speaker Change: is beginning to develop and cultivate those relationships so we can get prescriptions from those healthcare professionals.

Speaker Change: They need to learn to trust us, and they need to learn to, uh...

Kevin Ronald Sayer: So that is how it is going, and that is why this is different. So we really did things differently than we have done in the past. We believe, over the long term, it's absolutely the right thing to do. And we have confidence in this team that they'll work through this. We believe it will start to turn, you know, near the end, starting into Q4 and be in a very good position by 2025.

Speaker Change: and have some experiences with our products.

Speaker Change: So that is how that is going, and that is why this is different. So we really did things differently than we've done in the past. We believe over the long term it's absolutely the right thing to do, and we have confidence in this team that they'll work through this.

Kevin Sayer: We believe it will start to turn, you know, near the end, starting into Q4 and being in a very good position by 2025. And that is the time frame that we are looking at if things go faster. Great, but that's how we model our businesses. Jeremy said earlier, we've decelerated our new patient number from what we had in our original models for Q3 to what we have now, and we see things picking back up in Q4 as the group gets more involved. So that's where it is.

Kevin Ronald Sayer: And that is the timeframe that we are looking at if things go fast or great, but that's how we model our business. As Jereme said earlier, we've decelerated our new patient numbers from what we had in our original models for Q3 as to what we have now. And we see things picking back up in Q4 as the group gets more involved. So that's where it is. Thank you. Your next question comes from the line of Bill Plovanic with Canaccord Genuity. Your line is open.

Speaker Change: We believe it will start to turn near the end, starting into Q4 and be in a very good position by 2025.

Jereme: And that is the time frame that we are looking at if things go fast or great, but that's how we model our business. As Jereme said earlier, we've decelerated our new patient number from what we had in our original models for Q3 as to what we have now. And we see things picking back up in Q4 as the group gets more.

Bill Polsonak: Thank you. Your next question comes from the line of Bill Polsonak with Canaccord Genuity. Your line is open. Open. Great. Thanks for taking my question. Just wanted to ask, you know, so the pharmacy is good. DME is slowing. Do you think this is potentially a slowdown in penetration into the type one and type one? Two markets, you know, you're hitting about 60% type one, 40% type two in the US.

Jereme: involved. So that's where it is.

Jereme: Thank you.

Speaker Change: Your next question comes from the line of Bill Plovanac with Canaccord Genuity. Your line is open.

William John Plovanic: Great, thanks for taking my question. Just wanted to ask, you know, so the pharmacy is good, and DME is slow. Do you think this is potentially a slowdown in penetration into the type one and type two markets? You know, you're hitting about 60% type 1, 40% type 2 in the U.S. I mean, are you just starting to get a saturation point where each incremental market share or market penetration is that much tougher to come by? Or do you think this, you know, so it's a broader challenge? Or is this purely specific to Salesforce and DME, and what have you?

William John Plovanic: Great. Thanks for taking my question. Um, just wanted to ask, you know, so the pharmacy is good. DME is slowing. Do you think this is potentially a slowdown in penetration into the type one and type two markets?

Speaker Change: You know you...

Bill Polsonak: I mean, are you just starting to get a saturation point where each incremental market share or market penetration is that much tougher to come by, or do you think this, you know, is a broader challenge, or is this purely specific to sales force and DME and one avenue? Thank you. Yes. So, in the US, it's a good question in the US. We don't think so. There's still quite a bit of one way, and we're still seeing the growth patterns relatively steady there. If you look at the overall total market growth in the second quarter, I think what you can see is if you add up all the various players, it's still a very robust growth.

Speaker Change #101: Hidden about 60% Type 1, 40% Type 2 in the U.S. I mean, are you just starting to get a saturation point where each incremental...

Speaker Change: Market share or market penetration is that much tougher to come by or do you think this you know so it's a broader challenge or is this purely specific to Salesforce and DME and what have you? Thank you.

Jereme M. Sylvain: Yeah. Yeah. So in the U.S., it's a good question. In the U.S., we don't think so.

Jereme M. Sylvain: I mean, we're still quite a bit in one way, and we're still seeing the growth patterns relatively steady there. If you look at the overall total market growth in the second quarter, I think what you can see is if you add up all the various players, it's still very robust growth. I think in our case, certainly in the DME channel, it was a share loss, and I think we just held our own in the retail channel this quarter. And so I don't necessarily know that I would say that.

Speaker Change #100: Yeah, it's a good question. In the U.S., we don't think so. There's still quite a bit of one way, and we're still seeing the growth patterns.

Speaker Change #100: Relatively steady there. If you look at the overall total market growth...

Speaker Change #100: In the second quarter, I think what you can see is, is if you add up all the various players, it's still a very robust.

Kevin Sayer: I think in our case, certainly in the DME in the DME channel, it was a share loss. And I think we just held our own in the retail channel this quarter. And so, and so that that I don't necessarily know that I would say that I think it's more about us getting getting in charge of really our go to market and making sure with our, you know, our leading technology, we're getting our fair share there.

Speaker Change #100: growth. I think in our case, certainly in the DME, in the DME channel, it was a share loss.

Speaker Change #100: And I think we just held our own in the retail channel this quarter.

Jereme M. Sylvain: I think it's more about us getting in charge of our go-to market and making sure, with our, you know, our leading technology, we're getting our fair share there. As you zoom outside the U.S., as Kevin alluded to a little bit in the script, outside the U.S., it's really just chunks of coverage and chunks of approval. And while we got a bit of a chunk here in France, in Basel, there are some other chunks we are waiting on.

Speaker Change #102: And so that, I don't necessarily know that I would say that, I think it's more about us getting in charge of really our go-to-market and making sure with our leading technology, we're getting our fair share there. As you zoom outside the U.S., as Kevin alluded to a little bit in his script, outside the U.S.,

Kevin Sayer: As you zoom outside the US, is Kevin alluded to a little bit in the script outside the US? You know, it's really chunks of chunks of coverage and chunks of approval. And while we got a bit of a chunk here in France, basil, there are some chunks we are waiting on. And so, you know, it can slow a bit as an overall market. I think you see it when you compare; you know, when you combine results globally, there is a bit of a slow down outside the US. We don't think that it's a long-term issue because, as chunks of approvals come in, you find that there's still certainly pent-up demands.

Kevin: you know, it's really chunks of coverage and chunks of approval. And while we got a bit of a chunk here in France, Basel, there are some chunks we are waiting on. And so, you know, it can slow a bit as an overall market. I think you see it when you compare, you know, when you combine results.

Jereme M. Sylvain: And so, you know, it can slow a bit as an overall market. And I think you see that when you compare, you know, when you combine results globally, there is a bit of a slowdown outside the U.S. But we don't think that it's a long-term issue because as chunks of approvals come in, you find that there's still certainly pent up demand. So really, it's about coverage. And we are working on coverage in various different areas, both type 2 intensive, certainly in Basel.

Kevin: Globally, there is a bit of a slowdown outside the U.S.

Kevin: We don't think that it's a long-term issue because as chunks of approvals come in, you find that there's...

Kevin Sayer: So really it's about coverage. And we are working on coverage in various different areas, both type to intensive, certainly in Basil. And there's even some countries where we're still working on type one coverage in some of the more emerging markets. So, you know, so maybe outside the US, you see a temporal slow down, but not in the US. I think the US is still a very robust market. We're still seeing basil grow at the same rates that we expected as a total, total category. Still seeing the intensive insulin categories still growing well. And obviously with, you know, non-insulin opportunities with Stella and in the OTC products, I think it's a market that can continue to grow for some time.

Kevin: Still certainly pent-up demand, so really it's about coverage.

Kevin: And we are working on coverage in various different areas, both type 2 intensive, certainly in basal, and there's even some countries where we're still working on type 1 coverage in some of the more emerging markets.

Jereme M. Sylvain: And there are even some countries where we're still working on type 1 coverage in some of the more emerging markets. So, you know, maybe outside the U.S., you see a temporary slowdown, but not in the U.S. I think the U.S. is still a very robust market. We're still seeing Basel grow at the same rates that we expected as a total category.

Kevin: So maybe outside the U.S. you see a temporal slowdown, but not in the U.S. I think the U.S. is still a very robust market. We're still seeing Basel grow at the same rates.

Kevin Ronald Sayer: I'm still seeing the intensive insulin categories growing well. And obviously, with, you know, non-insulin opportunities with Stelo and the OTC products, I think it's a market that can continue to grow for some time. Yeah. I'll add to that. You talked about 60% penetration. I said several years ago, 80% for type 1 insulin users. And I believe the same with type 2 intensive insulin users.

Kevin: that we expected as a total category. Still seeing the intensive insulin categories still growing well. And obviously with non-insulin opportunities with Stelo and the OTC products.

Kevin Sayer: Yeah, I'll add to that. You know, you talked about a 60% penetration. I said several years ago, 80% per type one insulin users. And I believe the same with type two intensive insulin users. There is no reason somebody shouldn't be on a CGM. It's up to us to create the experience and the access structured word by word everybody can get to it. And those are the things we have to take on bill, and I agree with Jerry's, Jeremy's comments are ever just quarter focus on our execution a lot more than a market slow down. It's up to us to be better.

Speaker Change #103: I think it's a market that can continue to grow for some time. Yeah, I'll add to that. You talked about a 60% penetration. I said several years ago, 80% per type 1 insulin users, and I believe the same with type 2 intensive insulin users. There is no reason somebody shouldn't be on a CGM.

Jereme M. Sylvain: There is no reason somebody shouldn't be on a CGM. It's up to us to create the experience and the access structure whereby everybody can get to it. And those are the things we have to take on, Bill. And I agree with Jeremy's comments. Our efforts this quarter focus on our execution a lot more than a market slowdown. It's up to us to be better. Great, thanks. Your next question comes from the line of Chris Pasquale with Nefron. Your line is open.

William John Plovanic: It's up to us to create the experience and the access structure whereby everybody can get to it. And those are the things we have to take on, Bill. And I agree with Jereme's comments. Our efforts this quarter focus on our execution a lot more than a market slowdown. It's up to us to be better.

Unknown Executive: Thanks.

Unknown Executive: Your next question comes from the line of Chris Pasquale with Neffron. Your line is open. Thanks. I wanted to just clarify two points. One on the rebate issue. Do you need to anniversary that before revenue per patient becomes less of a drag? In other words, is that a period impact or is it a resetting the bar? Then you have to lap before you get back to normal.

William John Plovanic: Great, thanks.

Speaker Change #104: Your next question comes from the line of Chris Pasquale with Nefron. Your line is open.

Christopher Thomas Pasquale: Thanks. I wanted to just clarify two points. One, on the rebate issue, do you need to anniversary that before revenue per patient becomes less of a drag? In other words, is that a period impact, or is it resetting the bar, then you have to lap before you get back to normal?

Christopher Thomas Pasquale: Thanks. I wanted to just clarify two points. One on the rebate issue. Do you need to anniversary that before revenue per patient becomes less of a drag?

Christopher Thomas Pasquale: In other words, is that a period impact, or is it a resetting the bar, then you have to lap before you get back to normal? And Jereme, you touched on international briefly in the last question. Most of the focus thus far has been on U.S., but O.U.S. also disappointed. Am I right in interpreting, you think that the slower growth there...

Chris Pasquale: Jereme, you touched on international briefly in the last question. Most of the focus thus far has been on U.S., but O.U.S. Also disappointed. Am I right in interpreting? You think that the slower growth there is more normal until you get some of these new coverages to come through. That's really going to be the catalyst for a re-acceleration. Yeah, so in terms of your rebate dynamic, I think we talked about it coming faster, because it's coming faster, certainly here in the Q2 and to a lesser extent, Q1. You'll lap it pretty darn early next year. So we're going to lap it pretty darn quick.

Jereme M. Sylvain: And Jeremy, you touched on international briefly in the last question. Most of the focus thus far has been on the U.S., but OUS was also disappointed. Am I right in interpreting that you think that the slower growth is more normal until you get some of these new coverages to come through? That's really going to be the catalyst for a reacceleration? Yeah, so you know, in terms of your rebate dynamic, you know, I think we talked about it coming faster, and because it's coming faster, certainly here into Q2, and to a lesser extent in Q1, you'll have it pretty darn early next year.

Jeremy: It is more normal until you get some of these new coverages to come through. That's really going to be the catalyst for a re-acceleration.

Jeremy: Yeah, so, you know, in terms of your rebate dynamic, you know, I think we talked about it coming faster. And because it's come faster, certainly here into Q2 and to a lesser extent in Q1, you'll have it pretty darn early next year.

Jereme M. Sylvain: So we're going to lap it pretty darn quick. Obviously, it's going to impact us at a more acute rate. We expected it to be gradual over the course of this year into next year, which would still have been faster than G6.

Jereme Sylvain: Obviously, it's going to impact us at a more acute number. We expected it to be gradual over the course of this year into next year, which still would have been faster than G6. So, to that point, it does help for next year's comps because we will lap it pretty darn quick. In terms of the question on O.U.S., you know, one of the things we've done historically there is, it's a market where we've taken share, and obviously it's been growing. And this quarter, I would say we didn't take share, and that's the part of it. The other part then is in the chunks.

Jeremy: So we're going to lap it pretty darn quick. Obviously, it's going to impact us at a more acute number. We expected it to be gradual over the course of this year into next year, which still would have been faster than G6. So to that point, it does help for next year's comps.

Jereme M. Sylvain: So to that point, it does, it does help for next year's comps because we will lap it pretty darn quick. In terms of the question on OUS, you know, one of the things we've done historically there is it's a market where we've taken share, and obviously, it's been growing. And this quarter, I would say we didn't take share. And that's the part of it. The other part, then, is in the details.

Jeremy: because we will lap it pretty darn quick.

Speaker Change #106: In terms of the question on OUS...

Speaker Change #106: You know, one of the things we've done historically there is...

Speaker Change #106: It's a market where we've taken share and, obviously, it's been growing, and this quarter I would say we didn't take share, and that's part of it, but the other part then is in the chunks, and so there's two opportunities there, certainly there's chunks of reimbursement, which

Jereme M. Sylvain: And so there's two opportunities there. Certainly, there are chunks of reimbursement, which would help accelerate it. But our expectation with the product launches we've had and the quality of the products that we have is to take share. And so I think there are two opportunities; one's within our control, which is taking share. And then the other is within the industry's control, which is coverage.

Jereme Sylvain: And so there's two opportunities there. Certainly there's chunks of reimbursement, which would help accelerate it, but in our expectation with the product launches we've had in the quality of product that we have is to take share. And so I think there's two opportunities. One's within our control, which is taking share. And then the other is within the industry's control, which is coverage. And we're going to execute on that, which we can control and certainly aid in helping the industry coverage as well.

Speaker Change #106: would help accelerate it, but.

Speaker Change #106: And our expectation with the product launches we've had and the quality of product that we have is to take share. And so I think there's two opportunities. One's within our control, which is taking share. And then the other is within the industry's control, which is coverage. And we're going to execute on that, which we can control and certainly aid in helping the industry coverage as well.

Jereme M. Sylvain: And we're going to execute on that, which we can control and certainly aid and help the industry coverage as well. Your next question comes from the line of Matt Miksic with Barclays. Your line is open.

Matt Mixick: Thanks. Your next question comes from the line of Matt Mixick with Barclays. Your line is open. Hey, thanks so much for taking the question. So there's a couple of things that I think investors are trying to pin down here and understand. Given the announcement and the justly changing trajectory here in the back half.

Speaker Change #106: Thanks.

Speaker Change #107: Your next question comes from the line of Matt Miksic with Barclays. Your line is open.

Matthew Stephan Miksic: Hey, thanks so much for taking the question. So there's a couple of things that I think investors are trying to pin down here and understand, given the transcripts provided by Transcription Outsourcing, LLC, and their impact on pricing. Given that you're building out of field forest, growing into areas where you haven't traditionally called, as you talked about.

Matthew Stephan Miksic: Hey, thanks so much for taking the question. So there's a couple of things that I think investors are trying to pin down here and understand, given the announcement and the slight change in trajectory here in the back half.

Jereme M. Sylvain: Transcripts provided by Transcription Outsourcing, LLC, set off on a new trajectory that we now have to think about, you know, in the equation. Patient Growth and Price Mix. What does that translate into growth over the next? Transcripts provided by Transcription Outsourcing, LLC, places where you're going into new accounts.

Matt Mixick: And the first is around this, you know, the channel mix, indication mix, and their impact on pricing, maybe given that you're building out of field force that's growing into areas where you haven't traditionally called as you talked about, you know, potentially maybe the margin impact of that. But, you know, is that something where, you know, channel mixes and these pricing factors that sort of set off on a new trajectory that we now have to think about, you know, an equation of like patient growth and price mix. What does that translate into growth over the next couple of years?

Speaker Change #109: And the first is around this, you know, the channel mix, indication mix, and their, you know, impact on pricing, maybe given that you're building out of a field forest that's

Speaker Change #110: Growing into areas where you haven't traditionally called as you talked about, you know, potentially maybe the margin impact of that but

Speaker Change #110: But, you know, is that something where, you know, channel mixes and these pricing factors have sort of set off on a new trajectory that...

Speaker Change #110: That we now have to think about, you know, in the equation of like patient growth and price mix.

Matt Mixick: Should we be thinking differently about that?

Speaker Change #111: What does that translate into growth over the next couple of years? Should we be thinking differently about that?

Kevin Sayer: And then I guess the other just to cross it off the list, it doesn't sound like it's a factor, is just around competition. You know, is there any shift given the places where you're going into new accounts? and the PCP channel or elsewhere, you know, is there, are you feeling like you're making into slightly tougher competitive challenges? It didn't sound like it, but just if you could, you know, be crossed that off the list and provide any color on the first, that it would be terrific. Thanks. Yeah, so I'll maybe go with the crossing off the list.

Speaker Change #112: And then I guess the other, just to cross it off the list, it doesn't sound like it's a factor, it's just around...

Speaker Change #113: competition. You know, is there any shift given the places where you're going into new accounts in the PCP channel or elsewhere?

Jereme M. Sylvain: Unknown Executive, Sean Christensen, Shagun Chadha, Teri Lawver, DexCom Inc. Maybe cross that off the list and provide any color on the first one; that'd be terrific. Yeah, so I'll maybe go with crossing that off the list. There's always competition. And, you know, certainly, as we go into all of these categories, you're always going to have competition. So this is an area that we've been competing in for some time.

Speaker Change #114: You know, is there, are you feeling like you're getting into slightly tougher competitive challenges? It doesn't sound like it, but just if you could maybe cross that off the list and provide any color on the first, that'd be terrific. Thanks.

Kevin Sayer: There's always competition, and, you know, certainly as we go into all of these categories, you're always going to have that; we've always had competition. So this is an area that's been, we've been competing for some time. So I don't think that's necessarily a new dynamic. When you, when you expand the sales force clearly, your first call points, you've got to go through that. But this is no different than what we had in 2021. Last time we expanded the sales force. We went into new locations; it's building familiarity. And yes, there's always competition, but that's not a new thing.

Speaker Change #115: Yeah, so I'll maybe go with the crossing off the list. There's always competition. And, you know, certainly, as we go into all of these, these categories, you're always going to have that we've always had competition. So this is an area that's been we've been competing for some time. So I don't think that's necessarily a new dynamic. When you when you expand a Salesforce, clearly, your first call points,

Jereme M. Sylvain: So I don't think that's necessarily a new dynamic. When you expand the Salesforce, clearly, your first call points, you've got to go through that. But this was no different than what we had in 2021.

Jereme M. Sylvain: Last time we expanded Salesforce, we went into new locations, building familiarity. And yes, there's always competition, but that's not a new thing. So I think you can cross that off the list. You know, to your question on mix, I'd say this in the US: I don't think the market has moved all that much.

Speaker Change #115: You've got to go through that, but this was no different than what we had in 2021 last time we expanded the sales force.

Speaker Change #115: We went into new locations. It's building familiarity. And yes, there's always competition, but that's not a new thing. So I think you can cross that off the list.

Kevin Sayer: So I think you can cross that off the list. You know, to your question then on mix, I said it's in the US. I don't think the market has moved all that much. I think it gets back to our performance within that market, and we have to perform in those areas. And so when you talk about, you know, is this a new price, you're a pure price; you know, it hasn't really changed all that much. Certainly, in the DME channel, it hasn't changed all that much, and when we talk about that often. But when you have less performance in your highest reimbursed channels and better performance in a lower reimbursed channel, I've always talked about DME being higher than pharmacy.

Jereme M. Sylvain: I think it gets back to our performance within that market. And we have to perform in those areas. And so when you talk about, you know, is this a new price year over year pure price? You know, it hasn't really changed all that much. Certainly, in the DME channel, it hasn't really changed all that much.

Speaker Change #116: Unknown Speaker To your question then on mix, I'd say this, in the US, I don't think the market has moved all that much. I think it gets back to our performance within that market. And we have to perform in those areas. And so when you talk about, you know, is this a new price, year over year pure price?

Speaker Change #116: You know, it hasn't really changed all that much, certainly in the DME channel, it hasn't changed all that much, and we talk about that often, but when you have less performance in your highest reimbursed

Jereme M. Sylvain: And we talk about that often. But when you have less performance in your highest reimbursed channels and better performance in a lower reimbursed channel, we've always talked about DME being higher than pharmacy. And then you don't outperform on new patients. You kind of combine all those up.

Speaker Change #116: channels and better performance in a lower reimbursed channel. We've always talked about DME being higher than pharmacy. And then you don't outperform on new patients. You kind of combine all those up. That's what you really saw. So the opportunity is for us to get out there and get the new patients and get the new patients.

Kevin Sayer: And then you don't outperform on new patients; you kind of combine all those up. That's what you really saw. So the opportunity is for us to get out there and get the new patients and get the new patients in all of the channels and the channels that we've been in and get our fair share in those channels. So I think that's the best way to think about it is, you know, we can do it. It's within our, you know, it's within our purview to go do so as opposed to necessarily a shifting in the market itself.

Jereme M. Sylvain: That's what you really saw. So the opportunity is for us to get out there and get new patients in all of the channels and the channels that we've been in and get our fair share in those channels. So I think that the best way to think about it is, you know, we can do it. It's within our purview to go do so, as opposed to necessarily shifting in the market. Thanks so much.

Speaker Change #116: In all of the channels and the channels that we've been in and get our fair share in those channels So I think that's the best way to think about it is is you know, we we can do it It's it's within our our, you know, it's within our purview to go do so as opposed to necessarily a shifting in the market itself

Unknown Executive: Thanks so much.

Unknown Executive: This concludes the question and answer session.

Kevin Ronald Sayer: This concludes the question and answer session. I will turn the call over to Kevin Sayer for closing remarks. Well, thanks everybody for participating today. This is a tough call for us.

Speaker Change #117: Thanks so much.

Kevin Sayer: I will turn the call to Kevin Sayer for closing remarks. Well, thanks everybody for participating today. This is a tough call for us. I know to tough call for all of you supported us. We've provided the best view that we have going forward. We obviously will work hard to do better and provide you with more color and more things going forward. We are extremely excited. We're still a launch later this quarter, and we certainly expect to hear from you as we do that.

Speaker Change #117: This concludes the question and answer session. I will turn the call to Kevin Sayer for closing remarks.

Kevin Ronald Sayer: Well, thanks everybody for participating today. This is a tough call for us. I know it's a tough call for all of you who supported us.

Kevin Ronald Sayer: I know it's a tough call for all of you who supported us. We've provided the best view that we have going forward. We obviously will work hard to do better and provide you with more color and more things going forward. We are extremely excited for our Stella launch later this quarter, and we certainly expect to hear from you as we do that. I just want to point out that we've talked a lot about our commercial team today. They're fabulous. They've done very well, and they will rebound from this. I have every confidence they will. When you have something like this, it's on everybody in a company. It's not just on those guys.

Kevin Ronald Sayer: We've provided the best view that we have going forward. We obviously will work hard to do better and provide you with more color and more things.

Kevin Ronald Sayer: Going forward, we are extremely excited for our Stella launch later this quarter, and we certainly expect to hear from you as we...

Kevin Sayer: I just want to also point out we've talked a lot about our commercial team today. They're fabulous. They've done very well, and they will rebound from this. I have every confidence they will. When you have something like this, it's on everybody in a company. It's not just on those guys. We're all going to get a put our heads down and focus more. So you can get on that.

Speaker Change #119: do that. I just want to also point out, we've talked a lot about our commercial team today. They're fabulous. They've done very well and they will rebound from this. I have every confidence they will. When you have something like this, it's on everybody in a company. It's not just on those guys. We're all going to.

Kevin Ronald Sayer: We're all going to, going to put our heads down and focus more. So you can count on that. Thank you very much for being with us today and we'll see you all soon. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect. Speakers, please stand by for your deep.

Unknown Executive: Thank you very much for being with us today, and we'll see you all soon.

Speaker Change #119: We're going to put our heads down and focus more, so you can count on that. Thank you very much.

Unknown Executive: Thank you, ladies and gentlemen.

Speaker Change #119: being with us today and we'll see you all soon.

This concludes today's conference. Thank you for participating. You may now disconnect speakers. Please stand by for your debrief. Thank you very much.

Speaker Change #120: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect. Speakers, please stand by for your debrief.

Speaker Change #121: ?