Q2 2024 Insulet Corp Earnings Call

August 8, 2024

Speaker Change: Good afternoon, ladies and gentlemen, and welcome to the Insulet Corporation second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time.

Operator: Cooperation, second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star and then zero on your touch-tone phone.

Operator: Second Quarter 2024 Earnings Call At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star and then zero on your touchtone phone. As a reminder, this conference call is being recorded, and I would now like to turn the conference over to your host, Deborah Gordon, Vice President, Investor Relations.

Speaker Change: If anyone should require assistance during the conference, please press star and then zero on your touchtone phone.

Deborah Gordon: As a reminder, this conference call is being recorded, and I would now like to turn the conference over to your host, Deborah Gordon, Vice President, Investor Relations.

Speaker Change: As a reminder, this conference call is being recorded, and I would now like to turn the conference over to your host, Deborah Gordon, Vice President, Investor Relations.

Deborah Gordon: Good afternoon, and thank you for joining us for Insulet's second quarter 2024 earnings call. With me today, are Jim Hollingshead, President and Chief Executive Officer, and Ana Maria Chadwick, Chief Financial Officer and Treasurer. Both the replay of this call and the press release, discussing our second quarter results in 2024 guidance, will be available on the Investor Relations section of our website. Also on our website is our Supplemental Earnings Presidents. We encourage you to reference that document for a summary of key metrics and business updates.

Deborah Gordon: Good afternoon, and thank you for joining us for Insulet's second quarter 2024 earnings call. With me today are Jim Hollingshead, President and Chief Executive Officer, and Ana Maria Chadwick, Chief Financial Officer and Treasurer.

Deborah Gordon: Good afternoon and thank you for joining us for Insulet's second quarter 2024 earnings call.

Speaker Change: With me today are Jim Hollingshead, President and Chief Executive Officer, and Ana Maria Chadwick.

Speaker Change: Both the replay of this call and the press release discussing our second quarter results and 2024 guidance will be available on the Investor Relations section of our website.

Speaker Change: Also on our website is our Supplemental Earnings Presentation. We encourage you to reference that document for a summary of key metrics and business updates.

Deborah Gordon: Before we begin, we remind you that certain statements made by Insulet during the course of this call may be forward-looking and could materially differ from current expectations. Please refer to the cautionary statements in our FEC filings for a detailed explanation of the inherent limitations of such statements. We'll also discuss non-GAAP financial measures with respect to our performance, namely adjusted EBICA in constant currency revenue, which is revenue growth, excluding the effect of foreign exchange. These measures align with what management uses as supplemental measures in assessing our operating performance from period to period. And we believe they are helpful for others as well.

Deborah Gordon: Both the replay of this call and the press release discussing our second quarter results and 2024 guidance will be available on the Investor Relations section of our website. Also on our website is our Supplemental Earnings presentation. We encourage you to reference that document for a summary of key metrics and business updates. Before we begin, we remind you that certain statements made by Insulet during the course of this call may be forward-looking and could materially differ from current expectations.

Speaker Change: Before we begin, we remind you that certain statements made by Inslet during the course of this call may be forward-looking and could materially differ from current expectations. Please refer to the cautionary statements in our SEC filings for a detailed explanation of the inherent limitations of such statements.

Deborah Gordon: Please refer to the cautionary statements in our SEC filings for a detailed explanation of the inherent limitations of such statements. We'll also discuss non-GAAP financial measures with respect to our performance, namely adjusted EBITDA and constant currency revenue, which is revenue growth excluding the effect of foreign exchange. These measures align with what management uses as supplemental measures in assessing our operating performance from period to period, and we believe they are helpful for others as well. Additionally, unless otherwise stated, all financial commentary regarding dollar and percentage changes will be on a year-over-year basis with the exception of revenue growth rates, which will be on a year-over-year constant currency basis.

Speaker Change: We'll also discuss non-GAAP financial measures with respect to our performance.

Speaker Change: namely adjusted EBITDA and constant currency revenue, which is revenue growth excluding the effect of foreign exchange.

Speaker Change: These measures align with what management uses as supplemental measures in assessing our operating performance from period to period, and we believe they are helpful for others as well.

Deborah Gordon: Additionally, unless otherwise stated, all financial commentary regarding dollar and percentage changes will be on a year-over-year reported basis, with the exception of revenue growth rates, which will be on a year-over-year constant currency basis.

Speaker Change: Additionally, unless otherwise stated, all financial commentary regarding dollar and percentage changes will be on a year-over-year reported basis with the exception of revenue growth rates, which will be on a year-over-year constant currency basis. With that, I'll turn the call over to Jim.

Deborah Gordon: With that, I'll turn the call over to Jim.

Deborah Gordon: With that, I'll turn the call over to Jim. Thank you.

Jim Hollingshead: Thanks, Deb. Good afternoon, and thank you for joining us. 2024 is shaping up to be another year of rapid growth, fueled by strong demand for Omnipot 5 and our accelerating pace of product innovation. Our financial results in Q2 demonstrate our strong execution and significant momentum across all of our markets, both in the U.S. and internationally, and we remain the clear industry leader in automated insulin delivery. The Insulet team is executing at a high level and with increasing velocity, delivering strong financial performance and advancing our strategic initiatives.

Jim Hollingshead: Thanks, Deb.

Jim Hollingshead: Good afternoon, and thank you for joining us. 2024 is shaping up to be another year of rapid growth fueled by strong demand for Omnipot 5 in our accelerating pace of product innovation. Our financial results in Q2 demonstrate our strong execution and significant momentum across all of our markets, both in the U.S. and internationally. And we remain the clear industry leader in automated insulin delivery. The insulin team is executing at a high level and with increasing velocity, delivering strong financial performance and advancing our strategic initiatives. These first half results reinforce our confidence in an even stronger second half and another year of robust revenue growth and margin expansion as we continue to deliver on our mission to simplify and improve the lives of people with diabetes.

Jim Hollingshead: Thanks, Deb. Good afternoon, and thank you for joining us.

Jim Hollingshead: 2024 is shaping up to be another year of rapid growth fueled by strong demand for Omnipod 5 and our accelerating pace of product innovation.

Jim Hollingshead: Our financial results in Q2 demonstrate our strong execution and significant momentum across all of our markets, both in the U.S. and internationally.

Jim Hollingshead: and we remain the clear industry leader in automated insulin delivery. The insulin team is executing at a high level and with increasing velocity, delivering strong financial performance and advancing our strategic initiatives.

Jim Hollingshead: These first half results reinforce our confidence in an even stronger second half and another year of robust revenue growth and margin expansion as we continue to deliver on our mission to simplify and improve the lives of people with diabetes. Second quarter revenue exceeded our expectations across the board. In light of first-half results and continued strong momentum, we increased full year guidance for revenue, gross margin, and operating margin. On today's call, I'll update you on three things.

Jim Hollingshead: Second quarter revenue exceeded our expectations across the board. In light of first half results and continued strong momentum, we increased full year guidance for revenue, gross margin, and operating margin.

Jim Hollingshead: Second quarter revenue exceeded our expectations across the board.

Jim Hollingshead: In light of first half results and continued strong momentum, we increased full year guidance for revenue, gross margin, and operating margin.

Jim Hollingshead: On today's call, I'll update you on three things. Our Q2 results and the continuing strength of our competitive position in the market. Execution against our 2024 objectives to expand the Omnipot 5 platform globally. And lastly, our ongoing success capturing the value of scale across our business. Business. Starting with financial performance, in Q2 we achieve total Omnipot revenue growth of 26%, including US growth of 27% and international growth of 24%. Omnipot 5 continues to disrupt the diabetes technology landscape. In the US, we maintain the strong momentum and new customer starts, achieving sequential growth in Q2 in line with our expectations.

Jim Hollingshead: Our Q2 results and the continuing strength of our competitive position in the market. Execution against our 2024 objectives to expand the Omnipod 5 platform globally. And lastly, our ongoing success capturing the value of scale across our business. Starting with financial performance, in Q2, we achieved total Omnipod revenue growth of 26%, including U.S. growth of 27% and international growth of 24%. Omnipod 5 continues to disrupt the diabetes technology landscape. In the U.S., we maintained strong momentum in new customer starts, achieving sequential growth in Q2, in line with our expectations.

Jim Hollingshead: On today's call, I'll update you on three things.

Jim Hollingshead: Starting with financial performance, in Q2 we achieved total Omnipod revenue growth of 26%, including U.S. growth of 27% and international growth of 24%.

Jim Hollingshead: Omnipod 5 continues to disrupt the diabetes technology landscape.

Jim Hollingshead: In the U.S., we maintained a strong momentum in new customer starts, achieving sequential growth in Q2, in line with our expectations.

Jim Hollingshead: Our strategy is to drive market expansion through our focus on bringing people out of multiple daily injections onto Omnipot therapy. As a result of that focus, we continue to rapidly increase our customer base while remaining at the forefront of driving overall market expansion. Our growth in the quarter was driven by increasing new customer starts from MDI users in both Type 1 and Type 2 diabetes. At a market level, we are seeing an emerging dynamic in which customers who have adopted pump technology are switching manufacturers at a lower rate. As a result of that dynamic and our continuing market leadership in MDI, our new customer starts from competitive switches have become a smaller part of our business.

Jim Hollingshead: Our strategy is to drive market expansion through our focus on bringing people out of multiple daily injections onto Omnipot Therapy. As a result of that focus, we continue to rapidly increase our customer base while remaining at the forefront of driving overall market expansion. Our growth in the quarter was driven by increasing new customer starts from MDI users in both type 1 and type 2 diabetes. At a market level, we are seeing an emerging dynamic in which customers who have adopted pump technology are switching manufacturers at a lower rate.

Jim Hollingshead: Our strategy is to drive market expansion through our focus on bringing people out of multiple daily injections on to Omnipod therapy.

Jim Hollingshead: As a result of that focus, we continue to rapidly increase our customer base while remaining at the forefront of driving overall market expansion.

Jim Hollingshead: [inaudible]

Jim Hollingshead: Our growth in the quarter was driven by increasing new customer starts from MDI users in both Type 1 and Type 2 diabetes.

Jim Hollingshead: At a market level, we are seeing an emerging dynamic in which customers who have adopted pump technology are switching manufacturers at a lower rate.

Jim Hollingshead: As a result of that dynamic and our continuing market leadership in MDI, our new customer starts from competitive switches have become a smaller part of our business. However, we continue to be the net winner in competitive switching, winning more customers than we lose. During the quarter, roughly 85% of our U.S. new customer starts came from people previously using MDI, consistent with the prior quarter, and we continue to take share from our competitors.

Jim Hollingshead: As a result of that dynamic, and our continuing market leadership in MDI, our new customer starts from competitive switches have become a smaller part of our business.

Jim Hollingshead: However, we continue to be the net winner in competitive switching, winning more customers than we lose. During the quarter, roughly 85% of our US new customer starts came from people previously using MDI, consistent with the prior quarter, and we continue to take share from our competitors. Across both the type 1 and type 2 populations, we benefit from our competitive advantage in the pharmacy channel. The scale and scope we have built in this channel has significantly increased access and simplicity, which in turn helps to drive strong new customer starts and maintain very high customer retention. We are also working hard to continue to increase awareness among prescribers, and this work is paying off.

Jim Hollingshead: However, we continue to be the net winner in competitive switching, winning more customers than we lose.

Jim Hollingshead: During the quarter, roughly 85% of our US new customer starts came from people previously using MDI consistent with the prior quarter, and we continue to take share from our competitors.

Jim Hollingshead: Across both the type 1 and type 2 populations, we benefit from our competitive advantage in pharmacy. The scale and scope we have built in this channel have significantly increased access and simplicity, which in turn help to drive strong new customer starts and maintain very high customer retention. We're also working hard to continue to increase awareness among prescribers, and this work is paying off. A growing number of healthcare practitioners are writing scripts for Omnipod within both the endocrinologist and primary care physician channels.

Jim Hollingshead: Across both the Type 1 and Type 2 populations, we benefit from our competitive advantage in the Pharmacy Channel.

Jim Hollingshead: The scale and scope we have built in this channel has significantly increased access and simplicity, which in turn help to drive strong new customer starts and maintain very high customer retention.

Jim Hollingshead: We're also working hard to continue to increase awareness among prescribers and this work is paying off. A growing number of healthcare practitioners are writing scripts for Omnipod within both the endocrinologist and primary care physician channels.

Jim Hollingshead: A growing number of healthcare practitioners are writing scripts for Omnipod within both the endocrinologist and primary care physician channels. Insulate is the clear leader in type 1, and our Omipod platform also remains the clear choice for people with type 2. We are excited about the huge opportunity for us in type 2, subject to FDA clearance for Omnipod 5's label expansion, which we hope to receive this year. I will provide more detail in a few moments. Omnipod 5 wins everywhere it goes. In Q2, we were pleased to again deliver international revenue and new customer starts growth ahead of our expectations.

Jim Hollingshead: Insulet is the clear leader in Type 1, and our Omnipod platform also remains the clear choice for people with Type 2. We are excited about the huge opportunity for us in Type 2, subject to FDA clearance for Omnipod 5's label expansion, which we hope to receive this year. I will provide more detail in a few moments.

Jim Hollingshead: Insulet is the clear leader in Type 1 and our Omnipod platform also remains the clear choice for people with Type 2.

Jim Hollingshead: We are excited about the huge opportunity for us in Type 2, subject to FDA clearance for Omnipod 5's label expansion, which we hope to receive this year.

Jim Hollingshead: Omnipod 5 wins everywhere it goes. In Q2, we were pleased to again deliver international revenue and new customer starts growth ahead of our expectations. As a result of this success, we are significantly raising our international revenue outlook, this time by 600 basis points per year. We're rapidly approaching a half a billion dollars in annual international revenue for 2024.

Jim Hollingshead: I will provide more detail in a few moments.

Speaker Change: Omnipod 5 wins everywhere it goes.

Speaker Change: In Q2, we were pleased to again deliver international revenue and new customer starts growth ahead of our expectations.

Jim Hollingshead: As a result of this success, we are significantly raising our international revenue outlook this time by 600 basis points. We're rapidly approaching a half a billion dollars in annual international revenue for 2024, and we're still in the early innings. The accelerated revenue we are achieving returns us to growth rates above 20% at the high end of our international outlook. We've been able to achieve these results with only two full country launches and two more just getting started, which signals to us significant runway for continued international growth as we expand access to Omnipod 5 in all of the markets we serve.

Speaker Change: As a result of this success, we are significantly raising our international revenue outlook, this time by 600 basis points.

Jim Hollingshead: And we're still in the early stages. The accelerated revenue we are achieving returns us to growth rates above 20% at the high end of our international outlook. We've been able to achieve these results with only two full country launches and two more just getting started, which signals to us a significant runway for continued international growth as we expand access to Omnipod 5 in all of the markets we serve. Earlier this year, we promised that in 2024, we would deliver a cascade of innovation. And in Q2, we continued to do just that, launching multiple platform expansions.

Speaker Change: We're rapidly approaching a half a billion dollars in annual international revenue for 2024, and we're still in the early innings.

Speaker Change: The accelerated revenue we are achieving returns us to growth rates above 20% at the high end of our international outlook.

Speaker Change: We've been able to achieve these results with only two full country launches and two more just getting started, which signals to us significant runway for continued international growth as we expand access to Omnipod 5 in all of the markets we serve.

Jim Hollingshead: Andrew. Earlier this year, we promised that in 2024, we would deliver a cascade of innovation, and in Q2, we continued to do just that, launching multiple platform expansions. Following our successful U.S. limited market release, we entered full release of Omni-Pon-5 with Dexcom's G7 in the last two weeks of the quarter. Full integration with both G6 and G7 allows us to offer even more choice for our customers and capture the growth and adoption of Dexcom's latest sensor. As a reminder, Omni-Pon-5 with G7 is now exclusively available through several specialty pharmacies. This has allowed us to deliver an outstanding customer experience and ensure that new customers receive their Omni-Pon-5 G7 starter packs and pods seamlessly.

Speaker Change: Earlier this year, we promised that in 2024, we would deliver a cascade of innovation.

Speaker Change: And in Q2, we continue to do just that, launching multiple platform expansions.

Jim Hollingshead: Following our successful U.S. limited market release, we entered full release of Omnipod 5 with Dexcom's G7 in the last two weeks of the quarter. Full integration with both G6 and G7 allows us to offer even more choice for our customers and capture the growth and adoption of Dexcom's latest sensors. As a reminder, Omnipod 5 with G7 is now exclusively available through several specialty pharmacies. This has allowed us to deliver an outstanding customer experience and ensure that new customers receive their Omnipod 5 G7 Starter Packs and pods seamlessly. Demand for our G7 offering is strong, and early results are promising and in line with our expectations. We have been pleased with the performance of this channel.

Speaker Change: Following our successful U.S. limited market release, we entered full release of Omnipod 5 with Dexcom's G7 in the last two weeks of the quarter.

Speaker Change: Full integration with both G6 and G7 allows us to offer even more choice for our customers and capture the growth and adoption of DexCompleted Sensor.

Speaker Change: As a reminder, Omnipod 5 with G7 is now exclusively available through several specialty pharmacies.

Speaker Change: This has allowed us to deliver an outstanding customer experience and ensure that new customers receive their Omnipod 5 G7 Starter Packs and Pods seamlessly.

Jim Hollingshead: Demand for our G7 offering is strong; early results are promising and in line with our expectations. We have been pleased with the performance of this channel. It is operating at scale, and we can flex to meet ongoing increases in demand. And it allows us to focus our inventory on new customers in the near-term, which we continue to expect will provide us with a tailwind in new customer starts during the second half of the year. Last week, we provided our existing Omni-Pon-5 customers a free over-the-air software update, enabling their controllers and compatible smartphones to pair with G7.

Speaker Change: Demand for our G7 offering is strong, early results are promising and in line with our expectations.

Jim Hollingshead: It is operating at scale, and we can flex to meet ongoing increases in demand. And it allows us to focus our inventory on new customers in the near term, which we continue to expect will provide us with a tailwind in new customer starts during the second half of the year. Last week, we provided our existing Omnipod 5 customers with a free over-the-air software update, enabling their controllers and compatible smartphones to pair with G-SET.

Speaker Change: We have been pleased with the performance of this channel.

Speaker Change: It is operating in scale, and we can flex to meet ongoing increases in demand, and it allows us to focus our inventory on new customers in the near term, which we continue to expect will provide us with a tailwind in new customer starts during the second half of the year.

Speaker Change: Last week, we provided our existing OmniPOD 5 customers a free over-the-air software update, enabling their controllers and compatible smartphones to pair with G7.

Jim Hollingshead: Existing customers will be able to move to G7 once they see compatible pods appear in their preferred retail pharmacy. Given the success of our specialty pharmacy launch, we recently made the decision to allow the inventory ship in retail outlets to progress at a more natural pace. This will allow us to minimize any potential confusion for our customers and our channel partners, while also minimizing the risk of potential product returns and potential impact on our gross margins. We continue to expect the ease of retail pharmacy, as usual, will provide an additional new customer starts tailwind that, as G7 pods naturally become more widely available, now planned later in Q3.

Jim Hollingshead: Existing customers will be able to move to G7 once they see compatible pods appear in their preferred retail pharmacy. Given the success of our specialty pharmacy launch, we recently made the decision to allow the inventory shift in retail outlets to progress at a more natural pace. This will allow us to minimize any potential confusion for our customers and our channel partners while also minimizing the risk of potential product returns and potential impact on our gross margin.

Speaker Change: Existing customers will be able to move to G7 once they see compatible pods appear in their preferred retail pharmacy.

Speaker Change: Given the success of our specialty pharmacy launch, we recently made the decision to allow the inventory shift in retail outlets to progress at a more natural pace.

Speaker Change: This will allow us to minimize any potential confusion for our customers and our channel partners, while also minimizing the risk of potential product returns and potential impact on our gross margins.

Jim Hollingshead: We continue to expect the ease of retail pharmacy, as usual, will provide an additional new customer start tailwind as G7 pods naturally become more widely available, now planned later in Q3. During Q2, we achieved another major milestone with the initial U.S. launch of the Omnipod 5 iOS app with G6, and our limited market release is progressing very well. We are hearing from early users just how, quote, liberating the system is. One Potter shared that Omnipot 5, with the iPhone, is the biggest innovation since the introduction of AID. It's a delightful experience having everything on one device, end quote. We also had a Potter tell us, quote, Omnipot 5 puts managing diabetes in the back. End quote.

Speaker Change: We continue to expect the ease of retail pharmacy, as usual, will provide an additional new customer starts tailwind as G7 pods naturally become more widely available, now planned later in Q3.

Jim Hollingshead: During Q2, we achieved another major milestone with the initial US launch of the Omni-Pon-5 ILS app with G6, and our limited market release is progressing very well. We are hearing from early users just how, quote, liberating the system is. One potter shared that, quote, Omni-Pon-5 with the iPhone is the biggest innovation since the introduction of AID. It's a delightful experience having everything on one device, end quote. We also had a potter tell us, quote, "Omni-Pon-5 puts managing diabetes in the background," end quote. It is gratifying to hear this feedback, and it gives us even more confidence in our ability to continue scaling our limited release and then transition to full release in the fall.

Speaker Change: During Q2, we achieved another major milestone with the initial U.S. launch of the Omnipod 5 iOS app with G6, and our limited market release is progressing very well.

Speaker Change: We are hearing from early users just how, quote, liberating the system is.

Speaker Change: One potter shared that, quote, Omni-Pont-Five with the iPhone, is the biggest innovation since the introduction of AID. It's a delightful experience having everything on one device and a quote.

Speaker Change: We also had a potter tell us, quote, on the pot five, that's managing diabetes in the background, and quote.

Jim Hollingshead: It is gratifying to hear this feedback, and it gives us even more confidence in our ability to continue scaling our limited release and then transition to full release in the fall. Adding to this cascade of innovation in the U.S., we are pleased to announce that we expect to launch Omnipod 5 integrated with Abbott's Freestyle Libre 2 Plus Sensor by the end of this year. We are excited to expand our Omnipod 5 offering to reach customers in the U.S. who have chosen the Libre family of sensors.

Speaker Change: It is gratifying to hear this feedback, and it gives us even more confidence in our ability to continue scaling our limited release and then transition to full release in the fall.

Jim Hollingshead: Adding to this cascade of innovation in the US, we are pleased to announce that we expect to launch Omni-Pon-5 integrated with Abbott's Freestyle Libre 2-plus sensor by the end of this year. We are excited to expand our Omni-Pon-5 offering to reach customers in the US who have chosen the Libre family of sensors, and we are confident this portfolio expansion will generate increased demand for Omni-Pon-5 just as we are seeing in the early days of our launches with Libre 2-plus International.

Speaker Change: Adding to this cascade of innovation in the U.S., we are pleased to announce that we expect to launch Omnipod 5, integrated with Abbott's Freestyle Libre 2 Plus sensor.

Speaker Change: By the end of this year, we are excited to expand our Omnipod 5 offering to reach customers in the U.S. who have chosen the Libre family of sensors, and we are confident this portfolio expansion will generate increased demand for Omnipod 5, just as we are seeing in the early days of our launches with Libre 2 Plus internationally.

Jim Hollingshead: And we are confident this portfolio expansion will generate increased demand for Omnipod 5, just as we are seeing in the early days of our launches with Libre 2 Plus International. Turning to international markets, in Q2, we extended the Omnipod 5 platform into new markets, and we were the first to offer integration with Abbott's Libre 2 Plus sensor internationally, introducing this integrated offering in the UK and Netherlands. This also marks our first sensor-of-choice pod offering, which is compatible with both Libre 2 Plus and G6.

Jim Hollingshead: Lee. Turning to International and Q2, we extended the OmniPod 5 platform into new markets, and we were the first to offer integration with Abbott's Libre 2 Plus sensor internationally, introducing this integrated offering in the UK and Netherlands. This also marked our first sensor of choice pod offering, which is compatible with both Libre 2 Plus and G6. We are hearing from ACPs and patients that both integrations are providing an outstanding experience, including how easy it is to start OmniPod 5 using either leading sensor. Further expanding global reach, we recently launched OmniPod 5 in France, which is one of our largest markets.

Speaker Change: Turning to international, in Q2 we extended the Omnipod 5 platform into new markets and we were the first to offer integration with Abbott's Libre 2 Plus sensor internationally, introducing this integrated offering in the UK and Netherlands.

Speaker Change: This also marked our first center of choice pot-offery, which is compatible with both Libre 2 Plus and G6.

Jim Hollingshead: We are hearing from HCPs and patients that both integrations are providing an outstanding experience, including how easy it is to start Omnipot 5 using either leading sensor. Further expanding its global reach, we recently launched Omnipod 5 in France, which is one of our largest markets. We are in the early days, and feedback from patients and HCPs has been fantastic. They have noted the very positive clinical outcomes with particular emphasis on Omnipod 5's simplicity. Demand for Omnipod has always been high in France, and with Omnipod 5, we expect to continue to build on this strength and successfully drive robust adoption, as we have seen in our other international launch markets. Omnipod 5 is now available to the majority of our European customers. And, of course, we are not stopping there.

Speaker Change: We are hearing from ACPs and patients that both integrations are providing an outstanding experience, including how easy it is to start on May.5 using either leading sensor.

Speaker Change: Further expanding global reach, we recently launched Omnipot 5 in France, which is one of our largest markets.

Jim Hollingshead: We are in the early days, and feedback from patients and ACPs has been fantastic. ACPs have noted the very positive clinical outcomes, with particular emphasis on OmniPod 5's simplicity. Demand for OmniPod 5 has always been high in France, and with OmniPod 5 we expect to continue to build on this strength and successfully drive robust adoption, as we have seen in our other international launch markets. OmniPod 5 is now available to the majority of our European customers, and of course we are not stopping there. We are in the final planning stages for additional launches in Italy, the Nordics, Canada, Australia, Switzerland, and Belgium, with others soon to follow.

Speaker Change: We are in the early days, and feedback from patients and HCPs has been fantastic.

Speaker Change: HCPs have noted that the very positive clinical outcomes with particular emphasis on omnipotence for simplicity.

Speaker Change: Demand for Omnipod has always been high in France, and with Omnipod 5, we expect to continue to build on this strength and successfully drive robust adoption, as we have seen in our other international launch markets.

Speaker Change: Omnipod 5 is now available to the majority of our European customers and of course we are not stopping there. We are in the final planning stages for additional launches in Italy, the Nordics, Canada, Australia, Switzerland, and Belgium with others soon to follow.

Jim Hollingshead: We are in the final planning stages for additional launches in Italy, the Nordics, Canada, Australia, Switzerland, and Belgium, with others soon to follow. For all of the countries in our near-term pipeline, you will see us begin local market work to prepare for our planned commercial launches throughout 2025. We will keep you updated on our progress, capitalizing on the enormous international opportunity we are pursuing. Turning to type 2 diabetes, which represents another significant opportunity for growth in our business. We are all ready to be a market leader in our space. In the second quarter, people with type 2 represented roughly 25% of our U.S. new customer starts, continuing a strong, ongoing trend.

Jim Hollingshead: For all of the countries in our near term pipeline, you will see us begin local market work to prepare for our planned commercial launches throughout 2025. We will keep you updated on our progress, capitalizing on the enormous international opportunity we are pursuing.

Speaker Change: For all of the countries in our near-term pipeline, you will see us begin local market work to prepare for our planned commercial launches throughout 2025.

Speaker Change: We will keep you updated on our progress, capitalizing on the enormous international opportunity we are pursuing.

Jim Hollingshead: Turning to Type 2 diabetes, which represents another significant opportunity for growth in our business. We are all ready to market leader in our space. In the second quarter, people with Type 2 represented roughly 25% of our US new customer starts, continuing a strong ongoing trend. The Type 2 insulin delivery market is large and significantly under-penetrated. The combined patient population using either intensive insulin therapy or basil insulin is roughly three times the size of the Type 1 population. This year we have had two important pathways for innovation in the Type 2 space, both commercial and clinical.

Speaker Change: Turning to type 2 diabetes, which represents another significant opportunity for growth in our business.

Speaker Change: We are all ready to market leader in our space. In the second quarter, people with Type 2 represented roughly 25% of our U.S. new customer starts, continuing a strong ongoing trend.

Jim Hollingshead: The type 2 insulin delivery market is large and significantly underpenetrated. The combined patient population using either intensive insulin therapy or basal insulin is roughly three times the size of the type 1 population. This year, we have had two important pathways for innovation in the Type 2 space, both commercial and clinical. As you know, we have been commercially piloting Omnifog-Go, a product aimed at the needs of basal-only insulin users. The purpose of that pilot has been to accomplish two main goals. One, to determine the optimal way to expand our sales force.

Speaker Change: The type 2 insulin delivery market is large and significantly underpenetrated.

Speaker Change: The combined patient population using either intensive insulin therapy or basal insulin is roughly three times the size of the type 1 population.

Speaker Change: This year, we have had two important pathways for innovation in the type two space, both commercial and clinical.

Jim Hollingshead: As you know, we have been commercially piloting OmniPod GO, a product aimed at the needs of basil-only insulin users. The purpose of that pilot has been to accomplish two main goals: one, determine the optimal way to expand our sales force; and two, develop a better understanding of the patient profile that presents in non-specialist practices so we can better serve patient needs. This pilot has led to our identifying multiple patient profiles and designing our go-to-market strategy. In parallel, we have been pursuing clinical work to expand our offerings for people with Type 2 diabetes, most meaningfully with our pivotal trial with OmniPod 5 called Secure T2D.

Speaker Change: As you know, we have been commercially piloting OmniPod Go, a product aimed at the needs of basal-only insulin users.

Jim Hollingshead: And two, develop a better understanding of the patient profile that presents in non-specialist practice so we can better serve patients. This pilot has led to our identifying multiple patient profiles and designing our go-to-market strategy. In parallel, we have been pursuing clinical work to expand our offerings for people with type 2 diabetes, most meaningfully with our pivotal trial with Omnipod 5 called SECURE-T2-D. We recently presented the trial data at ADA, and I want to take a moment to summarize some of the key top-line results.

Speaker Change: The purpose of that pilot has been to accomplish two main goals. One, determine the optimal way to expand our sales force. And two, develop a better understanding of the patient profile that presents in non-specialist practices so we can better serve patient needs.

Speaker Change: This pilot has led to our identifying multiple patient profiles and designing our go-to-market strategy.

Speaker Change: In parallel, we have been pursuing clinical work to expand our offerings for people with type 2 diabetes most meaningfully with our pivotal trial with Omnipod 5 called SECURE T2-D.

Jim Hollingshead: Secure T2D is the largest study ever completed for the use of automated insulin delivery in type 2 diabetes, with approximately 300 people completing the protocol. The study participants were highly diverse and representative of the general population in the U.S.

Jim Hollingshead: We recently presented the trial data at ADA, and I want to take a moment to summarize some of the key top-line results. Secure T2D is the largest study ever completed for the use of automated insulin delivery in type 2 diabetes, with approximately 300 people completing the protocol. The study participants were highly diverse and representative of the general population in the U.S. This is important both from the point of view of health equity and because the study results will be clinically relevant to patients as they present in the real world. Those with a baseline A1C greater than 9, on average, achieved an A1C reduction of 2.1.

Speaker Change: We recently presented the trial data at ADA, and I want to take a moment to summarize some of the key top-line results.

Speaker Change: Security 2D is the largest study ever completed for the use of automated insulin delivery and type 2 diabetes, with approximately 300 people completing the protocol.

Speaker Change: The study participants were highly diverse and representative of the general population in the U.S.

Jim Hollingshead: This is important both from the point of view of health equity and because the study results will be clinically relevant to patients as they present in the real world. The clinical outcomes were striking. Omnipod 5 delivered an average A1C reduction of 0.8, with increasing benefit across the study population as baseline A1Cs were higher. For example, those with a baseline A1C greater than 9 on average achieved an A1C reduction of 2.1. More than half of the participants were concurrently on GLP-1 therapy. And notably, results were the same across all cohorts, whether or not on GLP-1.

Speaker Change: This is important, both from the point of view of health equity, and because the study results will be clinically relevant to patients as they present in the real world.

Speaker Change: The clinical outcomes we're striking.

Speaker Change: Omnipod 5 delivered an average A1C reduction of 0.8, with increasing benefit across the study population as baseline A1Cs were higher.

Speaker Change: Those with a baseline A1c greater than 9 on average achieved an A1c reduction of 2.1.

Jim Hollingshead: More than half of the participants were concurrently on GLP-1 therapy, and notably, results were the same across all cohorts, whether or not on a GLP-1. Importantly, roughly 20% of study participants were currently on basal-only insulin injections, and they also benefited in line with intensive insulin users. In this population, a key barrier to insulin adoption is the risk of hypoglycemia, and in secure T2D there was no increase in hypoglycemia. Finally, among several other demonstrated benefits, study participants reported a clinically valid and meaningful reduction in diabetes distress. These remarkable results clearly demonstrate Omnipot 5's benefit for people with type 2 diabetes.

Speaker Change: More than half of the participants were concurrently on GLP-1 therapy. And notably, results were the same across all cohorts, whether or not on a GLP-1.

Jim Hollingshead: Importantly, roughly 20% of study participants were currently on basal-only insulin injections, and they also benefited in line with intensive insulin users. In this population, a key barrier to insulin adoption is the risk of hypoglycemia, and in secure T2D, there was no increase in hypoglycemia. Finally, among several other demonstrated benefits, study participants reported a clinically valid and meaningful reduction in diabetes distress. These remarkable results clearly demonstrate Omnipod 5's benefit for people with type 2 diabetes.

Speaker Change: Importantly, roughly 20% of study participants were currently on basal-only insulin injections, and they also benefited in line with intensive insulin users.

Speaker Change: In this population, a key barrier to insulin adoption is the risk of hypoglycemia, and in

Speaker Change: Finally, among several other demonstrative benefits, study participants reported a clinically valid and meaningful reduction in diabetes distress.

Speaker Change: These remarkable results clearly demonstrate Omnipod 5's benefit for people with type 2 diabetes. On the basis of these results, in June we filed for expansion of our indications for use for Omnipod 5 with the FDA.

Jim Hollingshead: On the basis of these results, in June we filed for expansion of our indications for use for Omnipot 5 with the FDA. Now that we have such strong results from our clinical trial work and the rich learnings from our Omnipot GO commercial pilot, these two innovation streams will come together. In anticipation of FDA clearance of our label expansion, during the coming quarters we will make targeted investments in our sales force to extend our currently successful sales model and expand our feet on the street to further penetrate the Omnipot 5 prescribing base, and we will focus our efforts on Omnipot 5.

Jim Hollingshead: On the basis of these results, in June, we filed for an expansion of our Indications for Use for Omnipot 5 with the FDA. Now that we have such strong results from our clinical trial work and the rich learnings from our Omnipod Go commercial pilot, these two innovation streams will come together. In anticipation of FDA clearance of our label expansion, during the coming quarters, we will make targeted investments in our sales force to extend our currently successful sales model and expand our feet on the street to further penetrate the Omnipod 5 prescribing base.

Speaker Change: Now that we have such strong results from our clinical trial work, and the rich learnings from our Omnipod Go commercial pilot, these two innovation streams will come together.

Speaker Change: In anticipation of FDA clearance of our label expansion,

Speaker Change: During the coming quarters, we will make targeted investments in our sales force to extend our currently successful sales model and expand our feed on the streets to further penetrate the Omni-Pod 5 prescribing base, and we will focus our efforts on Omni-Pod 5.

Jim Hollingshead: And we will focus our efforts on Omnipod 5. We strongly believe Omnipod 5 will provide benefits to a wide range of insulin-using type 2 patients, both those using MDI and those on basal-only insulin therapy. Therefore, Omnipod 5 will replace Omnipod Go as our offering for people with type 2 diabetes on basal-only insulin.

Jim Hollingshead: We strongly believe Omnipot 5 will provide benefit to a wide range of insulin-using type 2 patients, both those using MDI and those on basal-only insulin therapy. Therefore, Omnipot 5 will replace Omnipot GO as our offering for people with type 2 diabetes on basal-only insulin. We are grateful for the patients and the HCPs that participated in our pilot, and we look forward to supporting them in their transition to other Omnipot therapies. Leading with Omnipot 5 in this space will enable us to serve more customers by leveraging and streamlining existing operations, supply chain, and manufacturing, and it eliminates the need for ongoing investments in product lifecycle management for a separate product platform.

Speaker Change: We strongly believe Omnipod 5 will provide benefit to a wide range of insulin-using type 2 patients, both those using NDI and those on basal-only insulin therapy.

Speaker Change: Therefore, Omni-Tot-Five will replace Omni-Tot-Go as our offering for people with tied two diabetes on basal-only insulin.

Jim Hollingshead: We are grateful for the patients and the HCPs that participated in our pilot, and we look forward to supporting them in their transition to other Omnibot therapies. Leading with Omnipod 5 in this space will enable us to serve more customers by leveraging and streamlining existing operations, supply chain, and manufacturing. And it eliminates the need for ongoing investments in product lifecycle management for a separate product platform. More importantly, we are confident we have a clear right to win in the Type 2 space.

Speaker Change: We are grateful for the patience and the ACT that participated in our pilot and we look forward to supporting them in their transition to other omnipot therapies.

Speaker Change: Leading with Omicon Clyde in this space will enable us to serve more customers by leveraging and streamlining existing operations, supply chain and manufacturing.

Speaker Change: And it eliminates the need for ongoing investments in product lifecycle management for a separate product platform.

Jim Hollingshead: More importantly, we are confident we have a clear right to win in the type 2 space. We expect to be the first to market in type 2 with an AID offering and not just any AID offering but with Omnipot 5, which is the product platform that quickly leapfrogged into market leadership once we launched it in type 1. Omnipot 5 will bring all the benefits to type 2 patients that it already delivers. These have access to the pharmacy channel, low to no upfront costs. Market leading ease of use and the unique discretion and convenience of a wearable, disposable patch pump with the day-to-day simplicity of full phone control with both Android and iOS.

Speaker Change: More importantly, we are confident we have a clear right to win in the Type 2 space.

Jim Hollingshead: We expect to be the first to market in Type 2 with an AID offering, and not just any AID offering, but Omnipod 5, which is the product platform that quickly leapfrogged into market leadership once we launched it in Type 1. Omnipod 5 will bring all the benefits to Type 2 patients that it already delivers, such as ease of access to the pharmacy channel and low to no upfront cost. Market-leading ease of use and the unique discretion and convenience of a wearable disposable patch pump with the day-to-day simplicity of full phone control on both Android and iOS.

Speaker Change: We expect to be the first to market in Type 2 with an AID offering, and not just any AID offering, but with Omnipod 5, which is the product platform that quickly leapfrogged into market leadership once we launched it in Type 1.

Speaker Change: Omnipod 5 will bring all the benefits to Type 2 patients that it already delivers.

Speaker Change: ease of access to the pharmacy channel, low to no upfront cost,

Speaker Change: Market-leading ease of use and the unique discretion and convenience of a wearable disposable patch pump with the day-to-day simplicity of full phone control with both Android and iOS.

Jim Hollingshead: All of that, while delivering the striking clinical benefits we have just established with our pivotal trial. We are excited to bring the best automated insulin delivery offer to the Type 2 market by the end of this year, pending clearance by the FDA.

Speaker Change: All of that while delivering the striking clinical benefits we have just established with our pivotal trial.

Jim Hollingshead: All of that while delivering the striking clinical benefits we have just established in our pivotal trials. We are excited to bring the best automated insulin delivery system to the type 2 market by the end of this year, pending clearance by the FDA. Ana will have more detail on the financial impact of our refining strategy in a few moments. But the biggest financial impact will be the opening of a new addressable market for us, which we fully expect will fuel our growth.

Speaker Change: We are excited to bring the best automated insulin delivery offer to the Type 2 market by the end of this year, pending clearance by the FDA.

Speaker Change: Ana will have more detail on the financial impact of our refining strategy in a few moments, but the biggest financial impact will be the opening of a new addressable market for us, which we fully expect will fuel our growth.

Jim Hollingshead: Before I hand over to Ana, I'd like to briefly discuss our expanded global manufacturing capabilities. We've been successfully investing in process innovation in our active facility, which is meaningfully contributing to gross margin expansion. And we have made significant investment in a new state-of-the-art manufacturing plant in Malaysia, which will enable us to scale faster and expand margins and cash flow. We are thrilled to have begun producing sellable Omnipod 5 product in Q2 in Malaysia ahead of schedule. Our new facility is over two times the size of our US facility, and we expect it to be accreted to gross margin in its first full year of production, ramping as volumes increase.

Jim Hollingshead: Before I hand over to Ana, I'd like to briefly discuss our expanded global manufacturing capability. We've been successfully investing in process innovation in our Acton facility, which is meaningfully contributing to gross margin. And we have made a significant investment in a new state-of-the-art manufacturing plant in Malaysia, which will enable us to scale faster and expand margins and cash flow. We are thrilled to have begun producing the sellable Omnipod 5 product in Q2 in Malaysia ahead of schedule.

Speaker Change: Before I hand over to Ana, I'd like to briefly discuss our expanded global manufacturing capabilities.

Ana: We've been successfully investing in process innovation in our Acton facility, which is meaningfully contributing to gross margin expansion.

Ana: And we have made significant investment in a new state-of-the-art manufacturing plant in Malaysia, which will enable us to scale faster and expand margins and cash flow.

Ana: We are thrilled to have begun producing sellable Omnipod 5 product in Q2 in Malaysia ahead of schedule.

Jim Hollingshead: Our new facility is over two times the size of our U.S. facility, and we expect it to be accretive to gross margin in its first full year of production, ramping as volumes increase. Our advantages in scale position us to grow our global business profitably and seamlessly meet the growing demand for Omnipot 5, which represents an important and distinct advantage over competitors. Shortly after this call, several members of our executive team will travel to Malaysia to attend our facility's official grand opening.

Ana: Our new facility is over two times the size of our U.S. facility, and we expect it to be accretive to gross margin in its first full year of production, ramping as volumes increase.

Jim Hollingshead: Our advantages in scale position us to grow our global business profitably and seamlessly meet the growing demand for Omnipod 5, which represents an important and distinct advantage over competitors. Shortly after this call, several members of our executive team will travel to Malaysia to attend our facility's official grand opening. We look forward to celebrating this occasion with our local team, as well as the many other Insulin employees globally, who helped make this happen.

Ana: Our advantages in scale position us to grow our global business profitably and seamlessly meet the growing demand for Omnipot 5, which represents an important and distinct advantage over competitors.

Ana: Shortly after this call, several members of our executive team will travel to Malaysia to attend our facilities official grand opening.

Jim Hollingshead: We look forward to celebrating this occasion with our local team, as well as the many other Insulet employees globally who helped make this happen. With that, I'll turn the call over to Ana to walk you through our results and guide.

Ana: We look forward to celebrating this occasion with our local team, as well as the many other insulin employees globally who helped make this happen.

Ana Chadwick: With that, I'll turn the call over to Anna to walk you through our results and guidance.

Ana: With that, I'll turn the call over to Ana to walk you through our results and guidance.

Ana Chadwick: Thank you, Jim, and good afternoon, everyone. We have significant momentum throughout our global business and delivered another strong quarter of financial results and strategic execution. Most importantly, our global team continues to advance our mission to simplify and improve the lives of people with diabetes. Second quarter results exceeded our expectations. We achieved 23% revenue growth driven by total Omnipod growth of 26%. Our estimated global retention remained stable. The foreign currency impact on total company revenue on our reported basis was approximately 80 basis points favorable versus our reported guy. U.S. Omnipod revenue growth was 27%. Finishing above the high end of our guidance range.

Ana Chadwick: Thank you, Jim, and good afternoon, everyone. We have significant momentum throughout our global business and delivered another strong quarter of financial results and strategic execution. Most importantly, our global team continues to advance our mission to simplify and improve the lives of people with diabetes. Our second quarter results exceeded our expectations. We achieved 23% revenue growth driven by total Omnibus growth of 26%. Our estimated global retention remains stable. The foreign currency impact on total company revenue on a reported basis was approximately 80 basis points favorable versus our reported guide. U.S.

Ana: Thank you, Jim, and good afternoon, everyone.

Ana: We have significant momentum throughout our global business and delivered another strong order of financial results and strategic execution. Most importantly, our global theme continues to advance our mission to simplify and improve the lives of people with diabetes.

Ana: Second quarter results exceeded our expectations. We achieved 23% revenue growth driven by total Omnipod growth of 26%.

Ana: Our estimated global retention remains stable.

Ana: The foreign currency impact on total company revenue on a reported basis was approximately 80 basis points favorable versus our reported guide.

Ana Chadwick: Omnibus Revenue Growth was 27%, finishing above the high end of our guidance. Omnipod 5, integrated with G6, is the primary driver of our strong growth, while our integration with G7 is gaining momentum. We are excited to have launched our U.S. full market release with G7 in June. And we will continue to phase in our channel partners over the coming months. I will speak more to this dynamic in a few moments.

Ana: U.S. Omnipotent Revenue Growth was 27%.

Ana: Finishing above the high end of our guidance range.

Ana Chadwick: Omnipod 5 integrated with G6 is the primary driver of our strong growth, while our integration with G7 is gaining momentum. We are excited to have launched our U.S. full market release with G7 in June and we will continue to face into our channel partners over the coming months. I will speak more to this dynamic in a few months. Our year-over-year U.S. revenue growth was primarily driven by our success, expanding our customer base, and increasing volume throughout the pharmacy channel, including the premium on our pod. This was partially upset by an estimated $10 million reduction of inventory in the channel, as we managed the U.S.

Ana: Omnipod 5, integrated with G6, is the primary driver of our strong growth, while our integration with G7 is gaining momentum.

Ana: We are excited to have launched our U.S. full market release with G7 in June .

Ana: And we will continue to phase into our channel partners over the coming months.

Ana Chadwick: Our year-over-year U.S. revenue growth was primarily driven by our success expanding our customer base and increasing volume throughout the pharmacy channel, including the premium on our pod. This was partially offset by an estimated $10 million reduction in inventory in the channel as we managed the Omnipod 5 G6 to G7 transition, which was in line with our expectations. US utilization trends were slightly lower than prior year as a result of Omnibus 5's significant ramp-up in the first full year of launch in 2023.

Ana: I will speak more to this dynamic in a few moments.

Ana: Our year-over-year U.S. revenue growth was primarily driven by our success expanding our customer base and increasing volume throughout the pharmacy channel, including the premium on our pod.

Ana: This was partially upset by an estimated $10 million reduction of inventory in the channel as we managed the omnipot 5G6 to G7 transition, which was in line with our expectations.

Ana Chadwick: 5G6-G7 transition, which was in line with our expectations. U.S. utilization trends were slightly lower than prior year as a result of Omnipot 5 significant rent in the first full year of launch in 2023. As it relates to our U.S. revenue expectations; we estimate approximately half of our beat versus the high end of our guidance was due to our strong commercial execution. The other half was due to pricing benefits from channel mix, as well as fewer G6 pod returns than anticipated. Our underlying growth is strong. We have significant momentum, and we are thrilled to have expanded our product offerings and provide greater choice for our customers.

Ana: U.S. utilization trends were slightly lower than prior year as a result of Omnibus 5's significant ramp in the first full year of launch in 2023.

Ana Chadwick: As it relates to our U.S. revenue expectations, we estimate approximately half of our beat versus the high end of our guidance was due to our strong commercial execution. The other half was due to pricing benefits from channel mix as well as fewer G6 pod returns than anticipated. Our underlying growth is strong, we have significant momentum, and we are thrilled to have expanded our product offering and provided greater choice for our customers.

Ana: As it relates to our U.S. revenue expectations, we estimate approximately half of our beat versus the high end of our guidance was due to our strong commercial execution.

Ana: The other half was due to pricing benefits from channel mix as well as fewer G6 pod returns than anticipated.

Ana: Our underlying growth is strong. We have significant momentum and we are thrilled to have expanded our product offering and provide greater choice for our customers.

Ana Chadwick: With our lead position in the market, and the many catalysts for us this year, we are in a great position to continue to deliver robust revenue and customer base growth in 2024 and well beyond.

Ana Chadwick: With our lead position in the market and the many catalysts for us this year, we are in a great position to continue to deliver robust revenue and customer-based growth in 2024 and well beyond. Turning to international, we achieved international omnipotent revenue growth of 24%. These results were, once again, well above our expectations.

Ana: With our lead position in the market and the many catalysts for us this year, we are in a great position to continue to deliver robust revenue and customer-based growth in 2024 and well beyond.

Ana Chadwick: During the international, we achieved international omnipot revenue growth of 24%. This results were once again well above our expectations. While omnipot-dash is doing very well internationally and remains a sizeable percentage of our overall international volume, omnipot 5 demand is very high and fueling our growth. Last year's launch in the UK and German are driving both revenue and new customer start growth. Although early, the increased demand we're seeing in France as a result of our recent Omnipot 5 launch is very encouraging. Together with our rollout of Omnipot 5, we've leveraged 2 plus in two of our markets around the start of STUQ, we are well positioned for continued growth.

Ana: Turning to international, we achieved international omnipotent revenue growth of 24%.

Ana: These results were once again well above our expectations. While Omnipod Dash is doing very well internationally and remains a sizable percentage of our overall international volume, Omnipod 5 demand is very high and fueling our growth.

Ana Chadwick: While Omnipod Dash is doing very well internationally and remains a sizable percentage of our overall international volume, Omnipod 5 demand is very high and fueling our growth. Last year's launch in the UK and Germany is driving both revenue and new customer start growth. Although early, the increased demand we're seeing in France as a result of a recent Opibot 5 launch is very encouraging, together with our rollout of Omnipod 5 with Libra 2 Plus in two of our markets around the start of 2Q.

Ana: Last year's launch in the UK and Germany are driving both revenue and new customer start growth. Although early, the increased demand we are seeing in France as a result of our recent Omnibot 5 launch is very encouraging.

Ana: Together with our rollout of Omnipod 5 with Libra 2 Plus in two of our markets around the start of 2Q, we are well positioned for continued growth.

Ana Chadwick: We are well positioned for continued growth. International utilization trends were slightly higher than in the prior year due to higher initial Omnibus 5 orders similar to what we saw last year in the U.S., but to a smaller degree. On a reported basis, foreign currency was a 90 basis points headwind over the prior year and approximately 110 basis points favorable versus our guide.

Ana Chadwick: International utilization trends were slightly higher than in prior year due to higher initial Omnipot 5 orders, similar to what we saw last year in the US, but to a smaller degree. On a reported basis, foreign currency was 90 basis points headwind over the prior year and approximately 110 basis points favorable versus our guide. Drop delivery revenue was $8 million, which was above our guidance range, partially due to an increase in orders from our partner and timing of production. Growth margin was 67.7 percent, up 90 basis points, primarily driven by pricing benefits in both the US pharmacy channel and our international markets, as well as ongoing manufacturing efficiency.

Ana: International Utilization Trends were slightly higher than in prior year.

Ana: Due to higher initial Omnipod 5 orders, similar to what we saw last year in the U.S. but to a smaller degree. On a reported basis, foreign currency was 90 basis points headwind over the prior year and approximately 110 basis points favorable versus our guide.

Ana Chadwick: Drug delivery revenue was $8 million, which was above our guidance range partially due to an increase in orders from our partner and timing of production. Gross margin was 67.7%, up 90 basis points, primarily driven by pricing benefits in both the US Pharmacy Channel and our international market, as well as ongoing manufacturing improvements. Partially offsetting this growth was a one-time charge of $13.5 million, or 280 basis points, relating to components that are not expected to be utilized.

Ana: Drug delivery revenue was $8 million.

Ana: Which was above our guidance range, partially due to an increase in orders from our partner and timing of production.

Ana: Gross margin was 67.7%, up 90 basis points, primarily driven by pricing benefits in both the U.S. Pharmacy Channel and our international markets.

Ana Chadwick: Partially of setting this growth was a one-time charge of $13.5 million or 280 basis points, relating to components that are not expected to be utilized. Likewise, this charge resulted from our strategic decision to go to market with oddly put 5 instead of oddly put go to drive accelerated growth in type 2 pending FDA clearance. Even with this charge, our execution throughout our global business is resulting in significant margin expansion, which strengthens our confidence in our margin trajectory over the long term as we continue to execute and scale efficiently. While operating operating expense increased in the quarter as we invest in our business, including to support the cascade of innovations we've had this year and those to come, our level of spend was lower than we expected due to a time shift into the second half of the year.

Ana: as well as on-boy manufacturing efficiency.

Ana: Partially upsetting this growth was a one-time charge of $13.5 million or 280-based points relating to components that are not expected to be utilized.

Ana Chadwick: This charge resulted from our strategic decision to go to market with Omnipod 5 instead of Omnipod Go to drive accelerated growth in type 2, pending FDA clearance. Even with this charge, our execution throughout our global business is resulting in significant margin expansion, which strengthens our confidence in our margin trajectory over the long term as we continue to execute and scale efficiently. While operating expenses increased in the quarter as we invest in our business, including to support the cascade of innovations we've had this year and those to come, our level of spend was lower than we expected due to a timing shift into the second half of the year.

Ana: This chart resulted from our strategic decision to go to market with Omnipod 5 instead of Omnipod Go to drive accelerated growth in Type 2 pending FDA clearance.

Ana: Even with this charge, our execution throughout our global business is resulting in significant margin expansion, which strengthens our confidence in our margin trajectory over the long term, as we continue to execute and scale efficiently.

Ana: While operating expenses increased in the quarter as we invest in our business, including to support the cascade of innovations we've had this year and those to come, our level of spend was lower than we expected due to a timing shift into the second half of the year.

Ana Chadwick: In order to drive the above market growth, we have been delivering; we will continue to invest in our business. At the same time, we are achieving operating margin expansion resulting from our revenue performance, growth margin improvements, and the operational leverage we are realizing throughout our business. Operating margin was 11.2%, and adjusted if it was 18.6% of revenue, both exceeding our expectations primarily due to our revenue performance and the shift in timing of spend. Expansion of this metrics was partially upset by the one-time charge of $13.5 million or 280 basis points related to omnipotence goals.

Ana Chadwick: In order to drive the above-market growth we have been delivering, we will continue to invest in our business. At the same time, we are achieving operating margin expansion resulting from our revenue performance, growth margin improvements, and the operational leverage we are realizing throughout our business. Operating margin was 11.2%, and adjusted IPICA was 18.6% of revenue, both exceeding our expectations, primarily due to our revenue outperformance and the shift in timing of spend.

Ana: In order to drive the above-market growth we have been delivering, we will continue to invest in our business.

Ana: At the same time, we are achieving operating margin expansion resulting from our revenue performance, growth margin improvement and the operational leverage we are realizing throughout our business.

Ana: Operating margin was 11.2% and adjusted IPICA was 18.6% of revenue.

Ana: Both exceeding our expectations.

Ana: primarily due to our revenue outperformance and the shift in timing of spend.

Ana Chadwick: Expansion of these metrics was partially offset by the one-time charge of $13.5 million, or 280 basis points, related to OPMI PUS goals. Last quarter, we provided color that due to our positive earnings trend, we may find at some point in the year that the valuation allowance we had against our deferred tax assets may no longer be required. In Q2, we reached this conclusion, and therefore, we released the majority of our valuation allowance, resulting in a non-cash tax benefit of approximately $150 million for the period, which we adjusted out for non-GAP purposes.

Ana: Expansion of these metrics was partially offset by the one-time charge of $13.5 million, or 280 basis points, related to Omnipot Goals.

Ana Chadwick: Last quarter we provided color that due to our positive earnings trend we may find at some point in the year that the valuation allowance we had against our deferred past assets may no longer be required. In Q2, we reached this conclusion and therefore we released the majority of our valuation allowance, resulting in a non-cash tax benefit of approximately 150 million in the period, which we adjusted out for non-gas purposes. We expect another 30 million to be recognized during the remainder of the year. We now expect our 2024 effective tax rate, excluding the full 180 million, to be in the range of 20 to 25%.

Ana: Last quarter, we provided color that due to our positive earnings trend, we may find at some point in the year that the valuation allowance we had against our deferred tax assets may no longer be required.

Ana: In Q2, we reach this conclusion, and therefore, we release the majority of our valuation allowance, resulting in a non-cash task benefit of approximately 150 million in the period.

Ana: which we adjusted out for non-GAP purposes.

Ana Chadwick: We expect another $30 million to be recognized during the remainder of the year. We now expect our 2024 effective tax rate, excluding the full $180 million, to be in the range of $20 to $25 million. Turning to cash and liquidity, we ended the quarter with approximately $820 million in cash and the full $300 million available under a credit facility.

Ana: We expect another $30 million to be recognized during the remainder of the year.

Ana: We now expect our 2024 effective tax rate, excluding the full $180 million, to be in the range of 20 to 25 percent.

Ana Chadwick: Turning to cash and liquidity, we ended a quarter with approximately 820 million in cash and the full 300 million available under a credit facility. Last week, we successfully extended the maturity of our term loan B to August 2031 and reprised the loan at a lower interest rate, which will reduce cumulative interest expense over the term of the loan by approximately $17 million. Our commitment to drive profitable growth and positive free cash flow is paying off, resulting in our ability to expand margins and strengthen our overall financial process.

Ana: Turning to cash and liquidity, we ended the quarter with approximately $820 million in cash and the full $300 million available under a credit facility.

Ana Chadwick: Last week, we successfully extended the maturity of our term loan B to August 2031 and repriced the loan at a lower interest rate, which will reduce cumulative interest expense over the term of the loan by approximately $17 million. Our commitment to drive profitable growth and positive free cash flow is paying off, resulting in our ability to expand margins and strengthen our overall financial program. Now turning to our 2024 outlook. For the full year, we're once again raising our expectations for total OmniPlus revenue growth to a range of 18 to 21 percent, representing a milestone of $2 billion in annual revenue at the high end of our range.

Ana: Last week, we successfully extended the maturity of our Term Loan B to August 2031 and repriced the loan at a lower interest rate, which will reduce cumulative interest expense over the term of the loan by approximately $17 million.

Ana: Our commitment to drive profitable growth and positive free cash flow is paying off, resulting in our ability to expand margins and strengthen our overall financial profile.

Ana Chadwick: Now turning to our 2024 outlook. For the full year, we're once again raising our expectations for total omnipot revenue growth to a range of 18 to 21%. Representing a milestone of 2 billion in annual revenue at the high end of our range. As a result, we also are raising total company revenue growth to a range of 16 to 19%. and for U.S. Omnipods, we're raising the low end of our revenue guidance and now expect a range of 18 to 21 percent growth. We expect growth to be driven primarily by continued strong demand for Omnipods 5, including the benefits of the reoccurring revenue stream from our annuity model and growing customer base.

Ana: Now turning to our 2024 Outlook.

Ana: For the full year, we're once again raising our expectations for total Omnipot revenue growth to a range of 18 to 21 percent, representing a milestone of $2 billion in annual revenue at the high end of our range.

Ana Chadwick: As a result, we also are raising total company revenue growth to a range of 16 to 19%. For U.S. Omnipod, we're raising the low end of our revenue guidance and now expect a range of 18 to 21% growth. We expect growth to be driven primarily by continued strong demand for Omnipod 5, including the benefits of the reoccurring revenue stream from our annuity model and growing customer base. As a reminder, we have a tougher comparison in the second half of 2024 versus the prior year period, resulting from the estimated orders that were accelerated in the fourth quarter of 2023 from 2024.

Ana: As a result, we also are raising total company revenue growth to a range of 16 to 19 percent.

Ana: For U.S. Omnipod, we're raising the low end of our revenue guidance and now expect a range of 18 to 21 percent growth.

Ana: We expect growth to be driven primarily by continued strong demand for Omnipod 5, including the benefits of the reoccurring revenue stream from our annuity model and growing customer base.

Ana Chadwick: As a reminder, we have a tougher comparison in the second half of 2024 versus the prior year period, resulting from the estimated orders that were accelerated in the fourth quarter of 2023 from 2024. We continue to anticipate both revenue dollars and new customers start in the second half of 2024 to be higher than levels in the first half. While we continue to expect sequential growth in new customer starts in both Q3 and Q4, our guidance now contemplates a less steep ramp of new customer starts in the second half of 2024. Driven by both the overall market reduction in competitive switching that Jim referred to and the slightly longer facing periods of our G7 pots through our retail channel partners.

Ana: As a reminder, we have a tougher comparison in the second half of 2024 versus the prior year period, resulting from the estimated orders that were accelerated in the fourth quarter of 2023 from 2024.

Operator: Corporation, second quarter, 2024 earnings call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star and then zero on your touch tone phone.

Ana Chadwick: We continue to anticipate both revenue, dollars, and new customer starts in the second half of 2024 to be higher than levels in the first half. While we continue to expect sequential growth in new customer starts in both Q3 and Q4, our guidance now contemplates a less steep ramp of new customer starts in the second half of 2024, driven by both the overall market reduction in competitive switching that Jim referred to and the slightly longer phasing period of our G7 POTS through our retail channel partners. While the latter has a temporary impact on new customer starts during the second half, this is simply timing.

Ana: We continue to anticipate both revenue dollars and new customers start in the second half of 2024 to be higher than levels in the first half.

Ana: While we continue to expect sequential growth in new customer starts in both

Deborah Gordon: As a reminder, this conference call is being recorded, and I would now like to turn the conference over to your host, Deborah Gordon, Vice President, Investor Relations. Good afternoon and thank you for joining us for Insulet's second quarter, 2024 earnings call.

Ana: Q3 and Q4, our guidance now contemplates a less steep ramp of new customer starts in the second half of 2024.

Deborah Gordon: With me today are Jim Hollingshead, President and Chief Executive Officer in Ana Maria Chadwick, Chief Financial Officer in Treasurer. Both the replay of this call and the press release, discussing our second quarter results in 2024 guidance will be available on the Investor Relations section of our website. Also on our website is our Supplemental Earnings Presidents, we encourage you to reference that document for a summary of key metrics and business updates.

Ana: Driven by folks, the overall market reduction in competitive switching that Jim referred to, and the slightly longer facing period of our G7-pots through our retail channel partners.

Ana Chadwick: While the latter has a temporary impact on new customer starts during the second half, it is simply timing. We are confident this strategy will maximize the customer and HCP experience, which is our top priority, while having the added benefit of limiting returns of the G6 pots in the channel. Our revenue guidance continues to assume a gradual restocking in the second half of this year as we expand our distribution of G7 pots throughout all our channel partners.

Jim Hollingshead: While the latter has a temporary impact on new customer starts during the second half, it is simply time.

Ana Chadwick: We are confident this strategy will maximize the customer and HCP experience, which is our top priority, while having the added benefit of limiting returns of the G6 spot in the channel. Our revenue guidance continues to assume a gradual restocking in the second half of this year as we expand our distribution of G7 pots throughout all our channel partners. For International Omnipod, we are raising our revenue growth expectations by 600 basis points to a range of 18 to 21 percent. On a reported basis, we now assume there will be no foreign currency impact.

Ana: We are confident this strategy will maximize the customer and HP experience, which is our top priority while having the added benefit of limiting returns of the G6 boss in the channel.

Deborah Gordon: Before we begin, we remind you that certain statements made by Insulet during the course of this call may be forward-looking, and could materially differ from current expectations. Please refer to the cautionary statements in our FEC filings for a detailed explanation of the inherent limitations of such statements. We will also discuss non-gap financial measures with respect to our performance, namely adjusted each of the FAFSA in constant currency revenue, which is revenue growth, excluding the effect of foreign exchange.

Ana: Our Revenue Guidance continues to assume a gradual restocking in the second half of this year as we expand our distribution of G7 POTS throughout all our channel partners.

Ana Chadwick: For international audit pod, we are raising our revenue growth expectations by 600 basis points to a range of 18 to 21%. On a reported basis, we now assume there will be no foreign currency impact. We anticipate revenue growth to be driven by the strong momentum from last year's Omnipod 5 launches in the UK and Germany, partially offset by headwinds in countries where we do not yet have Omnipod 5. Our 24 outlook for international business is strengthened every day by the success we are achieving with Omnipod 5. Greater than expected new customers starts today, as well as revenue outperformance, have resulted in raising our international Omnipod outlook by 1100 basis points since the start of 2024.

Speaker Change: For International Omnipod we are raising our revenue growth expectations by 600 basis points to a range of 18 to 21 percent.

Deborah Gordon: These measures align with what management uses as supplemental measures in assessing our operating performance from period to period, and we believe they are helpful for others as well. Additionally, unless otherwise stated, all financial commentary regarding dollar and percentage changes will be on a year over year reported basis with the exception of revenue growth rates, which will be on a year over year of constant currency basis.

Ana: On a report of bases, we now assume...

Ana Chadwick: We anticipate revenue growth to be driven by the strong momentum from last year's Omnipod 5 launches in the UK and Germany, partially offset by headwinds in countries where we do not yet have Omnipod 5. Our 2024 outlook for international business is strengthened every day by the success we're achieving with OmniPlus 5. Greater than expected new customer starts to date, as well as revenue outperformance, have resulted in raising our international Omnibus Outlook by 1100 basis points since the start of 2024. OmniPOD 5 is gaining traction and taking share. The feedback has been tremendous, and we are clearly a leader with our advanced technology.

Ana: There will be no foreign currency impact. We anticipate revenue growth to be driven by the strong momentum from last year's Omnipod 5 launches in the UK and Germany, partially offset by headwinds in countries where we do not yet have Omnipod 5.

Ana: Our 2024 outlook for international business is strengthened every day by the success we're achieving with OmniPlus 5.

Jim Hollingshead: With that, I'll turn the call over to Jim. Thanks Deb. Good afternoon, and thank you for joining us.

Ana: Greater than expected new customer starts today, as well as revenue outperformance, have resulted in raising our international Omnipot Outlook by 1,100 basis points since the start of 2024.

Jim Hollingshead: 2024 is shaping up to be another year of rapid growth fueled by strong demand for Omnipot 5 and our accelerating pace of product innovation. Our financial results in Q2 demonstrate our strong execution and significant momentum across all of our markets, both in the US and internationally. And we remain the clear industry leader in automated insulin delivery. The insulin team is executing at a high level and with increasing velocity, delivering strong financial performance and advancing our strategic initiatives.

Ana Chadwick: Omnipod 5 is gaining traction and taking share. Feedback has been tremendous, and we are clearly a leader with our advanced technology. While we expect our most recent Omnipod 5 launches to contribute to new customers start in the second half of this year, given the nature of our annuity model, we expect them to contribute even more meaningfully to revenue in 2025.

Ana: Omnipod 5 is gaining traction and taking share. Feedback has been tremendous and we are clearly a leader with our advanced technology.

Ana Chadwick: While we expect our most recent Omnipod 5 launches to contribute to new customer starts in the second half of this year, given the nature of our annuity model, we expect them to contribute even more meaningfully to revenue in 2025. Our incredible momentum internationally strengthens our confidence that Omnipod 5 will drive further growth and share gain in every market in which we launch. For both U.S. and international omnibus, guidance factors in quarterly revenue fluctuations resulting from the many product launches we have in 2024. This includes ramping inventory in the channel for new launches and reducing levels of prior Omniplot generation.

Ana: While we expect our most recent Omnipod 5 launches to contribute to new customer starts in the second half of this year, given the nature of our annuity model, we expect them to contribute even more meaningfully to revenue in 2025.

Jim Hollingshead: These first half results reinforce our confidence in an even stronger second half, and another year of robust revenue growth and margin expansion as we continue to deliver on our mission to simplify and improve the lives of people with diabetes. Second quarter revenue exceeded our expectations across the board. In light of first half results and continued strong momentum, we increased full your guidance for revenue, gross margin, and operating margin.

Ana Chadwick: Robert. Our incredible momentum internationally strengthens our confidence that Omnipot 5 will drive further growth and share gain in every market in which we launch. For both, US and international omnipot are guidance factors in quarterly revenue fluctuations resulting from the many product launches we have in 2024. This includes ramping inventory in the channels for new launches and reducing levels of prior Omnipot generations.

Speaker Change: Our incredible momentum internationally strengthens our confidence that omnipotified will drive further growth and jerking in every market in which we launch.

Ana: For both, U.S. and international Omnipod are guidance factors in quarterly revenue fluctuations resulting from the many product launches we have in 2024. This includes ramping inventory in the channels for new launches and reducing levels of prior Omnipod generations.

Jim Hollingshead: On today's call, I'll update you on three things. Our Q2 results and the continuing strength of our competitive position in the market, execution against our 2024 objectives to expand the Omnipot 5 platform globally. And lastly, our ongoing success capturing the value of scale across our business. Business. Starting with financial performance in Q2 we achieved total Omnipot revenue growth of 26% including US growth of 27% and international growth of 24%. Omnipot 5 continues to disrupt the diabetes technology landscape.

Ana Chadwick: Lastly, for drug delivered, our outlook has improved, and we now expect a decline in the range of 40 to 50 percent, reflecting our partners' revised forecast. Turning to 2024 gross margin, given our strong margin performance in the first half of 2024 and the retirement of some Greece we had modeled related to our product launches and new manufacturing facilities, we have greater confidence in our full year 2024 outlook. As a result, we now expect to land closer to the high end of our 68 to 69 percent range, even with the 70 basis points analyzed impact from the second quarter Omnipot Go charge.

Ana Chadwick: Lastly, for drug delivery, our outlook has improved, and we now expect a decline in the range of 40 to 50 percent, reflecting our partners' revised forecast. Turning to 2024 growth, March. Given our strong margin performance in the first half of 2024 and the retirement of some briefs we had modeled related to our product launches and new manufacturing facility, we have greater confidence in our full-year 2024 outlook. As a result, we now expect to land closer to the high end of our 68 to 69% range, even with the 70 basis points analyzed impact from the second quarter Omnipod Go chart.

Ana: Lastly, for drug-delivered, our outlook has improved, and we now expect a decline in the range of 40 to 50 percent, reflecting our partners' revised forecast.

Ana: Turning to 2024 Gross Margin.

Ana: Given our strong margin performance in the first half of 2024 and the retirement of some briefs we had modeled related to our product launches and new manufacturing facility, we have greater confidence in our full-year 2024 outlook.

Jim Hollingshead: In the US we maintained a strong momentum and new customer starts achieving sequential growth in Q2 in line with our expectations. Our strategy is to drive market expansion through our focus on bringing people out of multiple daily injections onto Omnipot therapy. As a result of that focus we continue to rapidly increase our customer base while remaining at the forefront of driving overall market expansion. Our growth in the quarter was driven by increasing new customer starts from NDI users in both type 1 and type 2 diabetes.

Ana: As a result, we now expect to land closer to a high end of our 68-69% range, even with the 70 basis points In fact, from the second quarter, OmniPodgo Charge.

Ana Chadwick: We are in a tremendous position to drive further gross margin expansion over the near and long term, and we remain committed to executing our strategy to deliver this growth. We remain committed to driving operating margin expansion as we capitalize on our efficiencies and economies of scale, even as we continue to heavily invest in commercial, clinical, and R&D to fuel our strong revenue growth trajectory. As a result, we are once again raising operating margin guidance another 50 basis points to approximately 14 percent.

Ana Chadwick: We are in a tremendous position to drive further growth margin expansion over the near and long term, and we remain committed to executing our strategy to deliver this growth. We are also committed to driving operating margin expansion as we capitalize on our efficiencies and economies of scale. Even as we continue to heavily invest in commercial, clinical, and R&D to fuel our strong revenue growth trajectory. As a result, we are once again raising our operating margin guidance another 50 basis points to approximately 14%.

Ana: We are in a tremendous position to drive further growth margin expansion over the year and long-term and we remain committed to executing our strategy to deliver this growth.

Ana: We remain committed to driving Operating Margin Expansion as we capitalize on our efficiencies and economies of scale, even as we continue to heavily invest in commercial, clinical, and R&D to fuel our strong revenue growth trajectory.

Jim Hollingshead: At a market level we are seeing an emerging dynamic in which customers who have adopted pump technology are switching manufacturers at a lower rate. As a result of that dynamic and our continuing market leadership in NDI our new customer starts from competitive switches have become a smaller part of our business. However we continue to be the net winner in competitive switching winning more customers than we lose. During the quarter roughly 85% of our US new customer starts came from people previously using NDI consistent with the prior quarter and we continue to take share from our competitors.

Ana: As a result, we are once again raising Operating Margin Guidance another 50 basis points to approximately 14%.

Ana Chadwick: Turning to our third quarter guidance, we expect total omnipot growth of 21 to 24 percent and total company growth of 18 to 21 percent. For US Omnipot, we expect growth of 21 to 24 percent, primarily driven by strong demand for Omnipot 5, strong new customer starts and the benefit of R&D model. For international Omnipot, we expect growth of 21 to 24 percent, driven by ongoing adoption of Omnipot 5, partially upset by headwinds in countries where we do not yet have Omnipot 5. On a reported basis, we now assume an unfavorable foreign currency impact of 100 basis points.

Ana Chadwick: Turning to our third quarter guidance, we expect total Omnipod growth of 21 to 24% and total company growth of 18 to 21%. For U.S. Omnipod, we expect growth of 21% to 24%, primarily driven by strong demand for Omnipod 5, strong new customer starts, and the benefit of our immunity model. For international Omnipod, we expect growth of 21% to 24%, driven by ongoing adoption of Omnipod 5, partially offset by headwinds in countries where we do not yet have Omnipod 5.

Ana: Turning to our third quarter guidance.

Ana: We expect total Omnipod growth of 21-24% and total company growth of 18-21%.

Speaker Change: For U.S. Army Pod, we expect growth of 21 to 24 percent, primarily driven by strong demand for Army Pod 5, stronger customer starts and the benefit of our military model.

Jim Hollingshead: Across both the type 1 and type 2 populations we benefit from our competitive advantage in the pharmacy channel. The scale and scope we have built in this channel has significantly increased access and simplicity which in turn helps to drive strong new customer starts and maintain very high customer retention. We're also working hard to continue to increase awareness among prescribers and this work is paying off. A growing number of healthcare practitioners are writing scripts for Omnipot within both the end of the chronologist and primary care physician channels.

Ana: For international army parts we expect growth of 21-24%, driven by ongoing adoption of army parts 5, partially upset by headwinds in countries where we do not yet have army parts 5.

Ana Chadwick: On a reported basis, we now assume an unfavorable foreign currency impact of 100 basis points. Finally, we expect Q3 drug delivery revenue to be approximately $3 to $4 million. In conclusion, our global Insulet team continues to execute and drive strong results. We generate robust new customer starts globally, and our cascade of innovations strengthens our position to deliver sustained revenue growth and margin expansion this year and beyond. With that, operator, please open the call for questions.

Ana: On a report of basis, we now assume an on-favorite little foreign currency impact of 100 basis points.

Ana Chadwick: Finally, we expect Q3 drug delivery revenue to be approximately $3 to $4 million. In conclusion, our global installation continues to execute and drive from results. We generate a robust new customer starts globally, and our cascade of innovations transcends our position to deliver sustained revenue growth and margin expansion this year and beyond.

Ana: Finally, we expect Q3 drug delivery revenue to be approximately $3 to $4 million.

Jim Hollingshead: Insulin is the clear leader in type 1 and our Omnipot platform also remains the clear choice for people with type 2. We are excited about the huge opportunity for us in type 2 subject to FDA clearance for Omnipot 5's label expansion which we hope to receive this year.

Ana: In conclusion, our global Insulet team continues to execute and drive strong results.

Ana: We generate robust new customer starts globally, and our cascade of innovations strengthens our position to deliver sustained revenue growth and margin expansion this year and beyond. With that, Operator, please open the call for questions.

Operator: With that operator, please open the call for questions.

Operator: Thank you. If you have a question at this time, please press star one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, press star one a second.

Jim Hollingshead: I will provide more detail in a few moments. Omnipot 5 wins everywhere it goes. In Q2 we were pleased to again deliver international revenue and new customer starts growth ahead of our expectations. As a result of this success we are significantly raising our international revenue outlook this time by 600 basis points. We're rapidly approaching a half a billion dollars in annual international revenue for 2024 and we're still in the early evenings.

Operator: Thank you. If you have a question at this time, please press star 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, press star 1 a second time. We are limiting each participant's question to one. However, please feel free to go back into the queue. And if time permits, we will be more than happy to take your follow-up questions at that time. Again, it is Star One if you would like to join the queue. And your first question comes from the line of Robbie Marcus with J.P. Morgan. Your line is open.

Speaker Change: Thank you. If you have a question at this time, please press star 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, press star 1 a second time.

Operator: We are limiting each participant's question to one. However, please feel free to go back into Q, and if time permits, we will be more than happy to take your follow-up questions at that time. Again, it is star one if you would like to join the Q.

Speaker Change: We are limiting each participant's question to one. However, please feel free to go back into queue and if time permits, we will be more than happy to take your follow-up questions at that time.

Jim Hollingshead: The accelerated revenue we are achieving returns us to growth rates above 20% at the high end of our international outlook. We've been able to achieve these results with only two full country launches and two more just getting started which signals to us significant runway for continued international growth as we expand access to Omnipot 5 in all of the markets we serve. Andrew.

Speaker Change: Again, it is star 1 if you would like to join the queue.

Robert Marcus: And your first question comes from the line of Robby Marcus with J.P. Morgan. Your line is open.

Speaker Change: And your first question comes from the line of Robbie Marcus with JP Morgan. Your line is open.

Robbie Marcus: Oh great, thanks for taking the questions, congrats on a really nice quarter. I want to ask some clarifying questions here, but I'll just get them all in.

Robert Marcus: Oh, great. Thanks for taking the questions. Congrats on a really nice quarter.

Robbie Marcus: Oh, great. Thanks for taking the questions. Congrats on a really nice quarter.

Robert Marcus: I want to ask some clarifying questions here. I'll just get them all in. First, you know, gross margin would have been something closer to 70 and a half percent in operating margin, and EBITDA would have been materially higher without the one-time charge to write down the inventory. I guess what was the reason to leave it in and not back it out? I think most companies would have backed it out.

Robbie Marcus: I want to ask some clarifying questions here. I'll just get them all in.

Robbie Marcus: First, you know, gross margin would have been something closer to 70.5% operating margin, and EBITDA would have been materially higher without the one-time charge to write down the inventory. What was the reason to leave it in and not back it out? I think most companies would have backed it out.

Jim Hollingshead: Earlier this year, we promised that in 2024, we would deliver a cascade of innovation, and in Q2, we continued to do just that, launching multiple platform expansions. Following our successful U.S. Limited Market release, we entered full release of OmniPunk 5 with Dexcom's G7 in the last two weeks of the quarter. Full integration with both G6 and G7 allows us to offer even more choice for our customers and capture the growth and adoption of Dexcom's latest sensor.

Robbie Marcus: First, you know, gross margin would have been something closer to 70 and a half percent of operating margin and EBITDA would have been materially higher without the one-time charge to write down the inventory, I guess.

Speaker Change: What was the reason to leave it in and not back it out? I think most companies would have backed it out. And then second, I think there's just a little confusion on the commentary around the new patient ramp in the second half. Maybe you could just add a little clarifying...

Robbie Marcus: And then second, I think there's just a little confusion on the commentary around the new patient ramp in the second half. Maybe you could just add a little clarifying commentary to that. Is it less new patients? Is it related to type 2 specifically? Is it competitive switches? Just make it crystal clear the view, and can you grow new patients year over year. Thanks a lot.

Robert Marcus: And then second, I think there's just a little confusion on the commentary around the new patient ramp in the second half. Maybe you could just add a little clarifying commentary to that. Is it less new patients? Is it related to type 2 specifically? Is it competitive switches? Just make it crystal clear the view and can you grow new patients year over year. Thanks a lot.

Jim Hollingshead: As a reminder, OmniPunk 5 with G7 is now exclusively available through several specialty pharmacies. This has allowed us to deliver an outstanding customer experience and ensure that new customers receive their OmniPunk 5 G7 starter packs and pods seamlessly. Demand for our G7 offering is strong, early results are promising and in line with our expectations. We have been pleased with the performance of this channel. It is operating at scale and we can flex to meet ongoing increases in demand, and it allows us to focus our inventory on new customers in the near term, which we continue to expect will provide us with a tailwind in new customer starts during the second half of the year.

Speaker Change: Commentary to that. Is it less new patients? Is it related to type 2 specifically? Is it competitive switches? Just make it crystal clear the view and can you grow new patients year over year? Thanks a lot.

Jim Hollingshead: Thanks, Robby.

Jim Hollingshead: Thanks, Robbie. It's great to have you on the call. Thanks for your question, and thanks for your congratulations. I'll start with the new customer startup question, and then I'll hand it back to Ana to talk about the margin and the one-time charge. So, on new customer starts, we're trying to describe what we see in the market really, really clearly. And the first thing is, we had a good sequential increase in new customer starts, which was our goal, and we hit those guidelines.

Jim Hollingshead: It's great to have you having on the call. Thanks for your question, and thanks for your congrats.

Speaker Change: Thanks, Robbie. It's great to have you on the call. Thanks for your question, and thanks for your congrats.

Jim Hollingshead: I'll start on the new customer's start question, and then I'll hand back to Anna to talk about the margin and the one time charge. So a new customer starts. We're trying to describe what we see in the market really, really clearly. And the first thing is we had we had good sequential increase in new customer starts, which was our goal, and we hit along those guys. What we're seeing in the market, we're trying to characterize the trend we're seeing in the market. So we were up an MDI in both Type 1 and Type 2. And looking at the quarter, what we see is a dynamic where just in the install base and market-wide competitive switching for patients already in the install base is down.

Speaker Change: I'll start on the new customer start question and then I'll hand back to Ana to talk about the margin and the one-time charge.

Speaker Change: So, a new customer starts. We're trying to describe what we see in the market really, really clearly. And the first thing is we had good sequential.

Ana: Increase in new customer starts, which was our goal, and we hit along those guides.

Jim Hollingshead: What we're seeing in the market, we're trying to characterize the trend we're seeing in the market. So, we were up in MDI in both type 1 and type 2. And looking at the quarter, what we see is a dynamic where, just in the installed base and market-wide, competitive switching for patients already in the installed base is down. And, you know, there was some question, as we looked at the data, to what extent that was seasonality over the last couple of quarters.

Ana: What we're seeing in the market, we're trying to characterize the trend we're seeing in the market, so we were up in MDI in both type 1 and type 2.

Jim Hollingshead: Last week, we provided our Existing OmniPunk 5 customers a free over-the-air software update enabling their controllers and compatible smartphones to pair with G7. Existing customers will be able to move to G7 once they see compatible pods appear in their preferred retail pharmacy. Given the success of our specialty pharmacy launch, we recently made the decision to allow the inventory ship in retail outlets to progress at a more natural pace. This will allow us to minimize any potential confusion for our customers and our channel partners while also minimizing the risk of potential product returns and potential impact on our gross margins. We continue to expect the ease of retail pharmacy, as usual, will provide an additional new customer starts tailwind that as G7 pods naturally become more widely available, now planned later in Q3.

Speaker Change: And looking at the quarter, what we see is a dynamic where just in the installed base and market-wide, competitive switching for patients already in the installed base is down.

Jim Hollingshead: And you know, there was some question as we've looked at the data to what extent that was seasonality of the last couple of quarters. But I think we looking back, we can see that it's just clear that the total pool of competitive switches is just down. And you know, one of the reasons for that, of course, is that over the last several quarters, we've grown our percentage of the install base really substantially. So there are a lot of Omnipod users out there, mostly Omnipod five users out there that are not targets for us to switch.

Speaker Change: And, you know, there was some question as we've looked at the data to what extent that was seasonality of last couple of quarters. But I think we've looking back, we can see that it's just clear that the total pool of competitors' switches is just down.

Jim Hollingshead: But I think, looking back, we can see that it's just clear that the total pool of competitive switchers is just down. And one of the reasons for that, of course, is that over the last several quarters, we've grown our percentage of the installed base really substantially. So there are a lot of Omnipod users out there, and especially Omnipod 5 users out there, that are not targets for us to switch to. But it's part of the market that...it's a smaller part of the market overall, and it's a smaller part of what's going on in the market.

Speaker Change: and one of the reasons for that, of course, is that over the last several quarters, we've grown our percentage of the installed base really substantially, so there are a lot of only pot users out there, mostly only pot five users out there that are not targets for us to switch.

Jim Hollingshead: But it's part of the market that it's a smaller part of the market overall, and it's a smaller part of what's going on in the market.

Speaker Change: But it's a smaller part of the market overall, and it's a smaller part of what's going on in the market. The important thing that we're trying to convey is that for us...

Jim Hollingshead: The important thing that we're trying to convey is that for us, the play is MDI. So if you think about it, somewhere between 8 or 9 out of 10 of our new customer starts are coming from MDI, and only about one new customer start comes out of competitive switching for us. And so that's, you know, that's very, very clear. That's our strategy. That's what we're trying to do. Omnipod Five is so appealing. We're the player that's growing the market, and we're clearly leading, and we continue to clearly lead in MDI. Having said that, we're also continuing to win in the competitive switching game.

Speaker Change: The play is MDI, and so if you think about it, somewhere between 8 or 9 out of 10 of our new customer starts are coming from MDI and only about one new customer start comes out of competitive switching for us.

Jim Hollingshead: During Q2, we achieved another major milestone with the initial U.S, launch of the OmniPot 5 ILS app with G6, and our limited market release is progressing very well. We are hearing from early users just how, quote, liberating the system is. One potter shared that, quote, OmniPot 5 with the iPhone is the biggest innovation since the introduction of AID. It's a delightful experience having everything on one device, end quote. We also had a potter tell us, quote, OmniPot 5 puts managing diabetes in the background, end quote. It is gratifying to hear this feedback, and it gives us even more confidence in our ability to continue scaling our limited release and then transition to full release in the fall.

Jim Hollingshead: That's our strategy. That's what we're trying to do. Omnipod 5 is so appealing.

Speaker Change: And so that's, you know, that's very, very clear. That's our strategy. That's what we're trying to do. OmniPOD 5 is so appealing. We're the player that's growing the market, and we're clearly leading, and we continue to clearly lead.

Jim Hollingshead: We're the player that's growing the market, and we're clearly leading, and we continue to clearly lead in MDI. Having said that, we also continue to win in the competitive switching game. We win more customers than we lose, but we're trying to characterize for all of you what we see as an overall trend in the market. Our play will continue to be to grow the market because Omnipod 5 allows us to bring in more patients, and we clearly lead in that, very consistent with our overall strategy. Anna, do you want to pick up on that question in the margin? Sure.

Speaker Change: and MDI.

Speaker Change: Having said that, we also continued to win in the competitive switching game. We win more customers than we lose, but we're trying to characterize for all of you what we see happening as an overall trend in the market. Our play will continue to be the grow the market because Omni-5-5 allows us to bring more patients in and we clearly lead in that very consistent with our overall strategy.

Jim Hollingshead: We win more customers than we lose, but we're trying to characterize for all of you what we see happening as an overall trend in the market.

Jim Hollingshead: Our play will continue to be to grow the market because Omnipod Five allows us to bring more patients in, and we clearly lead in that very consistent with our overall strategy.

Ana Chadwick: And did you want to pick up on that margin question? Sure. So absolutely. Thank you, Jim, for that.

Ana Chadwick: Sure. So, absolutely. Thank you, Jim, for that.

Speaker Change: and did you want to pick up on that origin question? Sure. So, absolutely.

Ana Chadwick: The background here is we do not adjust for operational items, but what we tried to do during the script and in our earnings press release is give you all the puts and takes, so the 280 basis points that flow through from gross margin to margin for the quarter and for the full year, the 70 basis points. And so you can see we're adjusting that one timer. We're executing incredibly well.

Jim Hollingshead: Adding to this cascade of innovation in the U.S., we are pleased to announce that we expect to launch OmniPot 5 integrated with Abbott's freestyle Libre 2 Plus sensor by the end of this year. We are excited to expand our OmniPot 5 offering to reach customers in the U.S., who have chosen the Libre family of sensors, and we are confident this portfolio expansion will generate increased demand for OmniPot 5, just as we are seeing in the early days of our launches with Libre 2 Plus Lee.

Speaker Change: Thank you Jim for that. The background here is we do not adjust for operational items, but what we try to do during the script and

Ana Chadwick: The background here is we do not adjust for operational items, but what we try to do during the script and in our earnings press release is give you all the puts and takes, so the 280 basis points that flow through from gross margin to up margin for the quarter and for the full year, the 70 basis points. So you can see we're adjusting that one-timer. We're executing incredibly well.

Speaker Change: and in our early express releases give you all the puts and takes so the 280 base points that flows through from gross margins to up margins for the quarter and for the full year the 70 base point. So you can see we're adjusting that one timer, we're executing incredibly well.

Ana Chadwick: And your next question comes from the line of Jeff Johnson with Baird. Your line is open.

Jeff Johnson: Andrew, the next question comes from the line of Jeff Johnson with Baird. Your line is open. Thank you, Jim. Maybe I can ask another question on your new start comments, and when I do, one of the questions I'm going to apply for a quarter guidance.

Speaker Change: [inaudible]

Jim Hollingshead: Turning to International and Q2, we extended the OmniPod 5 platform into new markets, and we were the first to offer integration with Abbott's Libre 2 Plus sensor internationally, introducing this integrated offering in the UK and Netherlands. This also marked our first sensor of choice pod offering, which is compatible with both Libre 2 Plus and G6. We are hearing from ACPs and patients that both integrations are providing an outstanding experience, including how easy it is to start OmniPod 5 using either leading sensor.

Speaker Change: And your next question comes from the line of Jeff Johnson with Baird. Your line is open.

Jeffrey Johnson: Thank you. Jim, maybe I could ask one clarifying question on your New Start comments, and then I do have one other question just on the Applied Fourth Quarter Guidance. But on the New Starts, I think I heard you say that your New Starts were up sequentially. I just want to confirm that and make sure that the U.S., a global or, you know, what number is that? And is that everything combined, kind of the MBI plus competitive converts, you put it all together, and New Starts overall for the company were up either U.S. or globally? And then, like I said, I had one question about the fourth quarter.

Jeff Johnson: Thank you. Jim, maybe I can ask one of the clarifying questions on your new start habits, and when I do it, and one of the questions I'm applying for for guidance, but I mean, you start, I think I heard you say that your new starts were up to this pointfully, I just want to confirm that and make sure that you last.

Jeff Johnson: But on the new start, I think I heard you say that your new start were up disappointfully. I just want to confirm that and make sure that the US, a global or, you know, what number is that? And is that everything combined, kind of the MDI plus competitive converts you put it all up and new starts overall to the company work up? Either US or globally, and then like I said, I have one question.

Speaker Change: A global or, you know, what number is that and is that everything combined, kind of the MDI plus competitive converge, you put it all up, it new starts overall to the company work up, either US or globally and then like I said, I have a point to my fourth quarter.

Jeff Johnson: I Fourth quarter. Yeah, so yeah, so Jeff, thank you for the question. New starts were up both in the US sequentially and internationally sequentially just to be clear. Okay, that's helpful. And then just on the implied fourth quarter guidance either for Anna or for you, Jim, you know, when I look at the US on the pod guidance. Depending on what I pick, is the midpoint or the point I decided to find three two within your guidance, the implied kind of fourth quarter US on the pod grows probably where from low single digits to low double digits.

Jim Hollingshead: Further expanding global reach, we recently launched OmniPod 5 in France, which is one of our largest markets. We are in the early days and feedback from patients and ACPs has been fantastic. ACPs have noted the very positive clinical outcomes with particular emphasis on OmniPod 5's simplicity. Demand for OmniPod 5 has always been high in France, and with OmniPod 5 we expect to continue to build on this strength and successfully drive robust adoption as we have seen in our other international launch markets. OmniPod 5 is now available to the majority of our European customers, and of course we are not stopping there.

Jim Hollingshead: So, yeah, Jeff, thank you for the question. New starts were up both in the U.S. sequentially and internationally, just to be clear.

Jeff Johnson: So, yeah, so Jeff, thank you for the question. New starts were up both in the U.S. sequentially and internationally sequentially.

Jim Hollingshead: Okay, that's helpful. And then just on the implied fourth-quarter guidance, either for Ana or for you, Jim, depending on what I pick as the midpoint or the point I decide to pick on 3Q within your guidance, the implied fourth-quarter U.S. Omnipod growth is probably anywhere from low single digits to low double digits, a bigger range there, because we're picking a point estimate in 3Q.

Speaker Change: Just to be clear.

Jeff Johnson: Okay, that's helpful. And then just on the implied fourth quarter guidance, either for Ana or for you, Jim, you know, when I look at the U.S. Omnipod guidance,

Speaker Change: Depending on what I pick is the mid-point or the point I decide to pick I'm free to within your guidance. The implied kind of force for U.S. on the pad growth probably will work in low-single digits to low-double giving the bigger range there because we're picking a point estimate in free to.

Jeff Johnson: A bigger range there because we're taking a point estimate in three two. You obviously had anywhere from six to nine points, depending on how much we count the pull forward into four to 23 last year, this kind of a year over your headwind. When I put all that in the house, or it seems like you're kind of talking about fourth quarter US on the pod growth in the road amid teams, you know, one is that a reasonable way to think about how you're thinking about adjusted US on the pod growth. And is that where we should be thinking about as kind of a stepping off point for 20, 25 or is there other things in 2025 like type two in that can maybe take you above that low to mid teams US on the pod growth.

Jim Hollingshead: You obviously had anywhere from six to nine points, depending on how much we count the pull forward into 4Q23 last year. That's kind of a year over your headwind. When I put all that in the hopper, it seems like you're kind of talking about fourth-quarter U.S. Omnipod growth in the low to mid teams. You know, one, is that a reasonable way to think about how you're thinking about adjusted U.S. Omnipod growth?

Speaker Change: You obviously added anywhere from 6 to 9 points depending on how much we count.

Paul: Paul forward into 4Q-23 last year, that's kind of a year over your headwind. When I put all that in the after it seems like you're kind of talking about fourth quarter U.S. I'm the podgrove in the road of mid teams. You know, one is that a reasonable way to think about how you're thinking about adjusted U.S. I'm the podgrove, and it's that where we should be thinking about as kind of a stepping off point for 20, 25, or is there other things in 20, 25, like type 2 in that, that could maybe take you above that one of the mid teams U.S. I'm the podgrove. Thank you.

Jim Hollingshead: And is that where we should be thinking about as kind of a stepping off point for 2025? Or are there other things in 2025, like Type 2 and that, that could maybe take you above that low to mid-team U.S. Omnipod growth?

Jim Hollingshead: Turning to Type 2 diabetes, which represents another significant opportunity for growth in our business. We are all ready to market leader in our space. In the second quarter, people with Type 2 represented roughly 25% of our US new customer starts, continuing a strong ongoing trend. The Type 2 insulin delivery market is large and significantly under penetrated. The combined patient population using either intensive insulin therapy or basil insulin is roughly three times the size of the Type 1 population.

Jeff Johnson: Thank you.

Ana Chadwick: Thank you. Jeff, I'll start with...

Jim Hollingshead: Jeff, I'll start with that. Thanks for the question. You are absolutely correct. There are absolutely a lot of puts and takes, especially in the fourth quarter.

Ana Chadwick: Jeff, I'll start with that. Thanks for the question. You are absolutely correct.

Speaker Change: Jeff, I'll start with that. Thanks for the question. You are absolutely correct. There are absolutely a lot of puts and takes especially in the fourth quarter. The important thing to recall here is that our overall guidance.

Ana Chadwick: There are absolutely a lot of puts and takes, especially in the fourth quarter. The important thing to recall here is that our overall guidance for the year continues to be strong. And I know you're referring here specifically to the US with that high end of our guidance at 21%. So we raised the bottom at 18% up to 21%. I do want to mention something as we think of 2025, but we are not providing guidance on during this goal. We'll wait until we wrap up the fourth quarter. We have a lot of things transpiring here, as Jim mentioned, in the second half of the year. G7.

Jim Hollingshead: The important thing to recall here is that our overall guidance for the year continues to be strong. And I know you're referring here specific to the US with that high end of our guidance had that 21% so we raised the bottom at 18 up to the 21%. I do want to mention something as we think of 2025, which we are not providing guidance during this call. We'll wait until we wrap up the fourth quarter. We have a lot of things transpiring here as Jim mentioned in the second half of the year. G7, we have iOS, we have Libre 2 Plus, we have the international that it's really ramping incredibly nicely and more countries ahead.

Speaker Change: for the year.

Speaker Change: Continues to be strong and I know you're referring here specific to the U.S.

Speaker Change: With that high end of our guidance at that 21%, so we raised the bottom at 18% up to the 21%.

Jim Hollingshead: This year we have had two important pathways for innovation in the Type 2 space, both commercial and clinical. As you know, we have been commercially piloting OmniPod GO, a product aimed at the needs of basil-only insulin users. The purpose of that pilot has been to accomplish two main goals, one, determine the optimal way to expand our sales force, and two, develop a better understanding of the patient profile that presents in non-specialist practices so we can better serve patient needs. This pilot has led to our identifying multiple patient profiles and designing our go-to-market strategy.

Speaker Change: I do want to mention something as we think of 2025, which we are not providing guidance through in this call, we'll wait until we wrap up the fourth quarter. We have a lot of things for inspiring here, as Jim mentioned, in the second half of the year. G7.

Ana Chadwick: We have iOS. We have Libra 2+. We have the internationalization that's really ramping incredibly nicely with more countries ahead. And we have the Type 2 label extension. Once we have more clarity into the latter part of the year, we'll come back and provide that additional guidance.

Speaker Change: We have iOS, we have Libre 2+, we have the International that it's really ramping incredibly nicely and more countries ahead, and we have the Type 2 label extensions. Once we have more clarity into the later part of the year, we'll come back and provide that additional guidance.

Jim Hollingshead: And we have the type two label extensions.

Jim Hollingshead: Once we have more clarity into the later part of the year, we'll come back and provide that additional guidance.

Operator: And your next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open.

Larry Biegelsen: And your next question comes from the line of Larry Bigholson with Wells Fargo. Your line is open. Good afternoon. Thanks for taking the question. Jim, one clarification on new starts for me. Did you say overall US starts of new start to be up in Q3 and Q4? Yeah, so Larry, I know we're actually going to get a lot of clarifying questions on this. I'll just let me see if I can characterize it clearly. I'll give it another try. So we expect sequential growth in the US and new customer starts in Q3 and then again in Q4.

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

Jim Hollingshead: In parallel, we have been pursuing clinical work to expand our offerings for people with Type 2 diabetes, most meaningfully with our pivotal trial with OmniPod 5 called Secure T2D. We recently presented the trial data at ADA, and I want to take a moment to summarize some of the key top line results. Secure T2D is the largest study ever completed for the use of automated insulin delivery in Type 2 diabetes, with approximately 300 people completing the protocol.

Lawrence Biegelsen: Good afternoon. Thanks for taking the question. Jim, one clarification on new starts for me. Did you say overall U.S. new starts would be up in Q3 and Q4?

Larry Bicklefin: Good afternoon. Thanks for taking the question. Jim, one clarification on new starts for me. Did you say overall U.S. new starts would be up in Q3 and Q4?

Jim Hollingshead: Yeah. So, Larry, I know we're actually going to get a lot of clarifying questions on this. I'll just, let me see if I can characterize it clearly. I'll give it another try.

Larry Bicklefin: Yeah, so, Lauren, I know we're actually going to get a lot of clarifying questions on this. Let me see if I can...

Jim Hollingshead: So, we expect sequential growth in the U.S. and new customer starts in Q3 and then again in Q4. And that's consistent with what we've said over the course of the last two quarters, where we expect the second half to be stronger and sequentially stronger, Q3-4, Q2-3-4 over the course of the year. And the ramp characteristics remain the same.

Larry Bicklefin: characterize it clearly I'll give it I'll give it another try

Larry Bicklefin: So, we expect sequential growth in the U.S. and new customer starts in Q3.

Jim Hollingshead: And that's consistent with what we've said over the course of the last two quarters, where we expect the second half to be stronger and sequentially stronger, 2, 3, 4, Q2, 3, 4 over the course of the year. And the ramp characteristics remain the same. The big tailwind driver for us is G7, and then we have other tailwinds coming. I think that one question that I'm sure people are asking themselves is what does that mean in terms of where we land? And there's two things that have changed in the core. One is, as I said, there's a smaller portion of the market overall that is competitive switching, although we continue to win clearly in competitive switching.

Jim Hollingshead: The study participants were highly diverse and representative of the general population in the US. This is important both from the point of view of health equity and because the study results will be clinically relevant to patients as they present in the real world. The clinical outcomes were striking. OmniPot 5 delivered an average A1C reduction of 0.8 with increasing benefit across the study population as baseline A1Cs were higher. Those with a baseline A1C greater than 9 on average achieved an A1C reduction of 2.1.

Larry Bicklefin: and then again in Q4.

Larry Bicklefin: And that's consistent with what we've said over the course of the last two quarters, where we expect the second half to be stronger and sequentially stronger, 2-3-4, Q-2-3-4, over the course of the year.

Larry Bicklefin: and the ramp characteristics remain the same. The big talent driver for us is G7 and then we have other talents coming.

Jim Hollingshead: The big tailwind driver for us is G7, and then we have other tailwinds coming. I think that one question that I'm sure people are asking themselves is, what does that mean in terms of where we land? And there are two things that have changed in the quarter. One is, as I said, there's a smaller portion of the market overall for competitive switching, although we continue to win clearly in competitive switching. And the other thing is, as we said in the prepared comments, our G7 launch is going very well in the pharmacy channel, and the ramp is good, demand is good, and we're servicing it really well. But we made the decision, because of that, to not disrupt the customer experience and the channel experience to let inventory flow more naturally into that channel.

Larry Bicklefin: I think that one question that I'm sure people are asking themselves is, what does that mean in terms of where we land, and there's two things that have changed in the quarter. One is, as I said, there's a smaller portion of the market overall is competitive switching, although we continue to win, clearly, in competitive switching. And the other thing is, as we said in the prepared comments, is...

Jim Hollingshead: More than half of the participants were concurrently on GLP1 therapy and notably results with the same across all cohorts whether or not on a GLP1. Importantly, roughly 20% of study participants were currently on basal only insulin injections and they also benefited in line with intensive insulin users. In this population, a key barrier to insulin adoption is the risk of hypoglycemia and in secure T2D there was no increase in hypoglycemia. Finally, among several other demonstrated benefits, study participants reported a clinically valid and meaningful reduction in diabetes distress.

Jim Hollingshead: And the other thing is, as we said in the prepared comments, is our G7 launch is going very well through especially pharmacy channel, and the ramp is good, demand is good, we're servicing it really well. But we made the decision because of that to not disrupt the customer experience and the channel experience to let inventory flow more naturally into that channel. And so both of those things create a little bit of a change in our outlook on total new customer starts in the second half.

Speaker Change: Our G7 launches going very well through the specialty pharmacy channel and the ramp is good, demand is good, we're servicing it really well, but we made the decision because of that to not disrupt the customer experience and the channel experience.

Larry Bicklefin: to let inventory flow more naturally into that channel.

Jim Hollingshead: And so, both of those things create a little bit, I would say, a little bit of a change in our outlook on total new customer starts in the second half. And so, as Anna characterized in her comments, we expect a steep ramp, but the ramp in the second half is probably a little bit less steep than we had been expecting before. Now, where that lands in terms of total year new customer starts, it is hard to characterize each of those.

Larry Bicklefin: and so both of those things create a little bit, I would say a little bit of a change in our outlook on total new customer starts in the second half and so as Ana characterized in her comments.

Jim Hollingshead: And so, as Anna characterized in her comments, we expect a steep ramp, but the ramp in the second half is probably a little bit less steep than we had been expecting before. Now where that lands in terms of total year new customer starts is hard to characterize; each of those two dynamics are kind of hard to quantify. Neither of them is that big, but combined, what we're expecting is a less steep ramp in the second half, but still a really good ramp in the second half in the new customer starts. from the U.S. Okay, so Jim, thanks.

Speaker Change: We expect this deep ramp, but the ramp in the second half is probably a little bit less steep than we had been expecting before Now where that lands in terms of total your new customer starts is hard to characterize each of those two dynamics

Jim Hollingshead: These remarkable results clearly demonstrate OmniPot 5's benefit for people with type 2 diabetes. On the basis of these results, in June, we filed for expansion of our indications for use for OmniPot 5 with the FDA. Now that we have such strong results from our clinical trial work and the rich learnings from our OmniPot Go commercial pilot, these two innovation streams will come together. In anticipation of FDA clearance of our label expansion, during the coming quarters, we will make targeted investments in our sales force to extend our currently successful sales model and expand our feed on the street to further penetrate the OmniPot 5 prescribing base and we will focus our efforts on OmniPot 5.

Jim Hollingshead: Each of those two dynamics is kind of hard to quantify. Neither of them is that big, but combined, what we're expecting is a less deep ramp in the second half, but still a really good ramp in the second half of new customer starts.

Speaker Change: are kind of hard to quantify neither of them is that big, but combined what we're expecting is a less deep ramp in the second half, but still a really good ramp in the second half in your customer starts in the U.S.

Lawrence Biegelsen: Okay, so Jim, thanks. And so margins, that's what I wanted to ask about. If I take out the one-time charge in the second quarter, your gross margin in the first half, I think, was about 70%. The implied margin, even with keeping the one-time charge in, is about 68 and a half percent. So why the lower gross margin in the second half versus the underlying first half? And how should we think about the benefit to your gross margin from Malaysia beyond 2024? Thanks.

Speaker Change: Okay. So, Jim, thanks. And so, margins, that's what I wanted to ask about. If I take out the one-time charge in the second quarter, your gross margin in the first half, I think, was about 70%.

Speaker Change: The implied, even with keeping the one-time charge in, it's about 68.5%. So, why the lower, lower than the lower gross margin in the second half versus the underlying first half?

Ana Chadwick: So why the lower, you know, lower than the, you know, lower gross margin in the second half versus the underlying first half? And how should we think about the benefit to your gross margin from the Malaysia? From Malaysia, you know, beyond 2024. Thanks.

Jim Hollingshead: We strongly believe OmniPot 5 will provide benefit to a wide range of insulin using type 2 patients, both those using MDI and those on basal only insulin therapy. Therefore, OmniPot 5 will replace OmniPot Go as our offering for people with type 2 diabetes on basal only insulin. We are grateful for the patients and the HCPs that participated in our pilot and we look forward to supporting them in their transition to other OmniPot therapies.

Speaker Change: How's we think about the benefit to your gross margin from the Malaysia beyond 2024? Thanks.

Ana Chadwick: Yes, let me jump into that. So in the first quarter, we had a gross margin of 69 and a half, and now we have 67.7. So that gets us shy of 69. And in the second half, we expect to be, as you can imagine, guiding to the full 69. So that's going to be higher than the 69.

Ana Chadwick: Yes, let me, let me jump into that. So in the first quarter, we had a gross margin of 69.5. And now we have 67.7. So that gets us shy of the 69. And in the second half, we expect to be, as you can imagine, we're guiding to the full 69. So that's going to be higher than the 69 to make the overall. So that guidance, I just want to be clear, contemplates that 70, for the full year, contemplates that 70 basis points of pressure. We did not back that out from our guidance. We kept the up me pod, go charge that we took this quarter in our guidance.

Speaker Change: Yes, let me let me jump into that. So in the first quarter, we had gross margin of 69 and a half, and now we have 67.7. So that gets us shy of the 69. And in the second half, we expect to be, as you can imagine, we're guiding to the full 69. So that that's going to be higher than the 69 to make the overall. So that guidance, I just want to be clear, contemplates that 70 for the full year, contemplates that 70 basis points of pressure, we did not back that out.

Ana Chadwick: So that guidance, I just want to be clear, contemplates that 70 basis points of pressure for the full year. We did not back that out from our guidance. We kept the UPnIPOD Go charge that we took this quarter in our guidance, so hopefully that helps answer the question. Malaysia has a more limited impact, so as it's starting to produce product, we expect to get more of that benefit as we move into 2025 and the first full year of operations.

Jim Hollingshead: Leading with OmniPot 5 in this space will enable us to serve more customers by leveraging and streamlining existing operations, supply chain, and manufacturing and it eliminates the need for ongoing investments in product lifecycle management for a separate product platform. More importantly, we are confident we have a clear right to win in the type 2 space. We expect to be the first to market in type 2 with an AID offering and not just any AID offering, but with OmniPot 5, which is the product platform that quickly leapfrogged into market leadership once we launched it in type 1.

Speaker Change: from our guidance, we kept.

Speaker Change: the UPnipod Go charge.

Ana Chadwick: So hopefully that helps answer the question.

Speaker Change: that we took this quarter in our guidance, so hopefully that helps answer the question. Malaysia has a more limited impact, so as it's starting to produce product and we expect to get more of that benefit as we move into 2025 and the first full year of running operations.

Ana Chadwick: Malaysia has a more limited impact. So as it's starting to produce product, and we expect to get more of that benefit as we move into 2025. And the first full year of running operations.

Margaret Case R: And your next question comes from the line of Margaret. Case R with William Blair. Your line is open. Hey, good afternoon, folks. Thanks for taking the question.

Margaret Kaysaur: And your next question comes from the line of Margaret Kaysaur with William Blair. Your line is open.

Jim Hollingshead: OmniPot 5 will bring all the benefits to type 2 patients that it already delivers. Use of access to the pharmacy channel, low to no upfront costs. Market leading ease of use, and the unique discretion and convenience of a wearable, disposable patch pump with the day-to-day simplicity of full phone control with both Android and iOS. All of that while delivering the striking clinical benefits we have just established with our pivotal trial. We are excited to bring the best automated insulin delivery offer to the Type 2 market by the end of this year, pending clearance by the FDA.

Speaker Change: and your next question comes from the line of Margaret K. Thor with William Blair. Your line is open.

Jim Hollingshead: Hey, good afternoon, folks. Thanks for taking the time to answer the question. Yeah, I guess one on international and one on U.S., and I apologize for having both here. But, you know, internationally, obviously, you're seeing a tremendous amount of traction. So can you give us some sense around how much of the beaten guidance range with quarters related to new patient ads in these two countries, the two new countries that you guys are in? You know, are you seeing kind of this change in MDI starts just in general where, you know, you can start to say, hey, this is a market trend?

Margaret Case R: Yeah, I guess one on international, one on US, and apologies for having both in here. But you know, internationally, obviously you're seeing a tremendous amount of traction. So can you give us some sense around how much of the beaten guidance range with quarters related to new patient ads. And these two countries, the two new countries, but you better end. You know, are you seeing kind of this change in MDX starts just in general where you can start to say, hey, this is a market trend. This isn't just they were we're taking competitive switches or more new patient ads, which I'm sure it's part of it.

Speaker Change: Hey, good afternoon, folks. Thanks for taking the questions.

Speaker Change: [inaudible] and U.

Speaker Change: In these two countries, the two new countries that are in, are you seeing kind of this change in MDI starts just in general where you can start to say, hey, this is a market trend. This isn't just, hey, we're taking competitive switches or more new patient ads, which I'm sure is part of it, but just trying to get a sense of what's going on on the ground. And is it happening similar as we saw in the US a few years ago?

Jim Hollingshead: This isn't just, hey, we're taking competitive switches or more new patient ads, which I'm sure is part of it. But just trying to get a sense of what's going on on the ground. And is it happening similar to what we saw in the U.S. a few years ago? And then just on the U.S. side, and this is a clarification question that may be helpful, may not. But, you know, the change in competitive converts. Historically, you know, 20 percent of new patient ads were competitive converts. Now you're saying it's 15 percent. So the delta seems pretty minor, five percent. But correct me if I'm wrong on that. Thank you. Yeah

Jim Hollingshead: Ana will have more detail on the financial impact of our refined strategy in a few moments, but the biggest financial impact will be the opening of a new addressable market for us, which we fully expect will fuel our growth. Before I hand over to Ana, I'd like to briefly discuss our expanded global manufacturing capabilities. We've been successfully investing in process innovation in our active facility, which is meaningfully contributing to gross margin expansion.

Margaret Case R: But just trying to get a sense of what's going on on the ground and is it happening similar as we saw in the US a few years ago.

Margaret Case R: And then just on the US side, and this is, you know, a clarification question that may be helpful, may not, but you know, the change in competitive converts to me historically, you know, 20% of new patient ads are competitive converts. Now you're saying it's 15%. So the Delta seems pretty minor or 5%, but correct me if I'm wrong on that. Thank you.

Speaker Change: And then just on the U.S. side, and this is, you know, a clarification question that may be helpful, may not, but, you know, the change in competitive converts, to me, historically, you know, 20% of new patient ads were competitive converts.

Speaker Change: Now you're saying it's 15%. So the delta seems pretty minor, 5%, but correct me if I'm wrong on that. Thank you.

Jim Hollingshead: And we have made significant investment in a new state-of-the-art manufacturing plant in Malaysia, which will enable us to scale faster and expand margins and cash flow. We are thrilled to have begun producing sellable Omnipod 5 product in Q2 in Malaysia ahead of schedule. Our new facility is over two times the size of our US facility, and we expect it to be needed to gross margin in its first full year of production, ramping as volumes increase. Our advantages in scale position us to grow our global business profitably and seamlessly meet the growing demand for Omnipod 5, which represents an important and distinct advantage over competitors.

Jim Hollingshead: Yeah, thanks, Margaret. I'll take both of those on International. Yeah, we're so pleased with on E55 internationally. It clearly wins wherever we're able to take it. The UK launch continues to go extremely well. The Germany launch is going extremely well and, you know, off a very strong performance in previous quarters. We, you know, both of those countries continue to perform ahead of expectation.

Jim Hollingshead: Yeah, thanks, Margaret. I'll take both of those.

Speaker Change: Yeah, thanks Margaret. I'll take both of those. On international...

Jim Hollingshead: On the international stage, we're so pleased with Omni 5.5 internationally. It clearly wins wherever we're able to take it. The UK launch continues to go extremely well. The German launch is going extremely well. And off a very strong performance in previous quarters, both of those countries continue to perform ahead of expectation. We've just launched in France, but it's very early.

Speaker Change: We're so pleased with Omni 5.5 internationally. It clearly wins wherever we're able to take it.

Speaker Change: The UK launch continues to go extremely well. The Germany launch is going extremely well and you know off a very strong

Speaker Change: performance in previous quarters. We, you know, both of those countries continue to perform

Jim Hollingshead: France is a really big market for us, but we know we have big demand and we're rolling that out. We have patients on the product, and that's beginning to ramp up. And then the other launch is, of course, the Netherlands.

Jim Hollingshead: We've just launched in France. It's very early. France is a really big market for us, but we know we have big demand, and we're rolling that out. We have patients on product and ask beginning to ramp. And then the other launches, of course, the Netherlands. And when we launched the Netherlands, that was our first. When we entered that country, we entered it with our sensor of choice offering, which is G6 and Libre 2. And we took that sensor of choice offering into the UK, where we were already on mark of a G6. And that offering is going great.

Speaker Change: ahead of expectation.

Speaker Change: We've just launched in France. It's very early. France is a really big market for us.

Speaker Change: But we know we have big demand and we're ruling that out. We have patients on product and that's beginning to ramp.

Jim Hollingshead: Shortly after this call, several members of our executive team will travel to Malaysia to attend our facility's official grand opening. We look forward to celebrating this occasion with our local team, as well as the many other insulin employees globally who helped make this happen.

Jim Hollingshead: And when we launched in the Netherlands, that was our first time entering that country, entering it with our sensor of choice offering, which is G6 and Libre 2. And we took that sensor of choice offering into the UK, where we were already on the market with G6. And that offering is doing great.

Speaker Change: And then the other launch is, of course, the Netherlands. And.

Speaker Change: When we lost the Netherlands, that was our first, when we entered that country, we entered it with our censor of choice.

Speaker Change: offering which is G6 and Libra II and we took that center choice offering into the UK where we were already on America with G6.

Ana Chadwick: With that, I'll turn the call over to Anna to walk you through our results and guidance.

Jim Hollingshead: So these are largely MDI growth in a driven growth phenomenon in all of those countries. As you know, internationally, most people who are on technology are locked into their contracts. And so, so it's largely MDI new to market customers. Many of them are already on a CGM, because CGM pays road for us. But they're largely new to market pumpers. And we're really, really pleased with the performance, and it makes us very bullish as we continue to roll out on E55 International.

Speaker Change: And that that offering is going great, you know, so so these are these are largely MDI growth, you know, driven growth phenomena in all of those countries, as you know.

Ana Chadwick: Thank you, Jim, and good afternoon everyone. We have significant momentum throughout our global business and delivered another strong quarter of financial result and strategic execution. Most importantly, our global team continues to advance our mission to simplify and improve the lives of people with diabetes. Second quarter results exceeded our expectations. We achieved 23% revenue growth driven by total Omnipod growth of 26%. Our estimated global retention remained stable. The foreign currency impact on total company revenue on our reported basis was approximately 80 basis points favorable versus our reported guys.

Jim Hollingshead: So these are largely MDI-driven growth phenomena in all of those countries. As you know, internationally, most people who are on technology are locked into their contracts. And so it's largely MDI, new to market customers. Many of them are already on a CGM because CGM paves the road for us, but they're largely new to market pumpers. And we're really, really pleased with the performance, and it makes us very bullish as we continue to roll out Omnipod 5 internationally. On the U.S. dynamic, yeah, I mean, it's, we're trying to characterize it. It's a little bit odd. We know there are lots of questions about what's going on out there.

Speaker Change: Internationally, most people who are on technology are locked into their contracts and so

Speaker Change: So it's largely MDI, new-to-market customers. Many of them are already on a CGM because CGM paves the road for us, but they're largely new-to-market pumpers, and we're really, really pleased with the performance, and it makes us very bullish as we continue to roll out OMNIPOD 5 internationally.

Jim Hollingshead: Emily. On the U.S. dynamic, yeah, I mean, we're trying to characterize it. It's a little bit odd. We know there's lots of questions about what's going on out there, but you're right. The, the mixed shift is, that kind of percentage mixed shift. That's consistent with what we had last quarter: 85, 15. But as we look at the market, what we see as a trend now where just total base of competitive switching out there is smaller. It's a smaller part of the market. It's never been our focus in the business. It's not our focus now. Our focus is market growth.

Jim Hollingshead: But you're right. The mix shift is, that kind of percentage mix shift is consistent with what we had last quarter, 85-15. But as we look at the market, what we see is a trend now where just the total base of competitive switching out there is smaller. It's a smaller part of the market. It's never been our focus in the business. It's not our focus now. Our focus is market growth, so that 85-15 split is actually not that big of a deal.

Speaker Change: On the U.S. dynamic, yeah, I mean, we're trying to characterize it, it's a little bit odd. We know there's lots of questions about what's going on out there.

Speaker Change: But you're right, the mix shift is, that kind of percentage mix shift, that's consistent with what we had last quarter, 85-15.

Speaker Change: But as we look at the market...

Ana Chadwick: U.S. Omnipod revenue growth was 27%. Finishing above the high end of our guidance range. Omnipod 5 integrated with G6 is the primary driver of our strong growth, while our integration with G7 is gaining momentum. We are excited to have launched our U.S, full market release with G7 in June, and we will continue to face into our channel partners over the coming months. I will speak more to this dynamic in a few moments.

Speaker Change: What we see is a trend now where just total base of competitive switching out there is smaller, it's a smaller part of the market, it's never been our focus in the business, it's not our focus now, our focus is market growth, but that 85-15 split is actually not that big a deal, we just want to characterize the dynamic.

Jim Hollingshead: But that 85, 15 split is actually not that big a deal. We just want to characterize the dynamic. MDI, we were up in MDI and type one in U.S., up in MDI and type two. And we very clearly lead in MDI, although we also win in competitive switching. That's a smaller part of our market or lower emphasis for us strategically.

Jim Hollingshead: We just want to characterize the dynamic. MDI, we were up in MDI in Type 1 in the U.S., up in MDI in Type 2, and we very clearly lead in MDI, although we also win in competitive switching. That's a smaller part of our market and a lower strategic emphasis for us. And your next question comes from the line of Travis Steed with Bank of America. Your line is open. Hey, I wanted to clarify a couple things.

Speaker Change: MDI, we were up in MDI, tech one in US, up in MDI, tech two and we very clearly lead in MDI. Although we also win and competitive switching, that's a smaller part of our market and lower emphasis for us strategically.

Travis Steed: And your next question comes from the line of Travis Steed with Bank of America. Your line is open. Hey, I wanted to clarify a couple of things from the earlier questions. So Jim, did you say new starts can grow year over year in the second half of the year? And also wanted to clarify, you were commenting on demand is good, but you made a decision to disrupt the customer experience and let M employees throw naturally so that create the. Donate the outlook in the second half.

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

Ana Chadwick: Our year over year, US revenue growth was primarily driven by our success, expanding our customer base, and increasing volume throughout the pharmacy channel, including the premium on our pod. This was partially upset by an estimated $10 million reduction of inventory in the channel as we managed the ugly plus five G6 to G7 transition, which was in line with our expectations. Our nation trends were slightly lower than prior year as a result of omnipot 5 significant rent in the first full year of launch in 2023.

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

Travis Steed: Hey, I wanted to clarify a couple things from the earlier questions, so Jim, did you say new starts can grow year over year in the second half of the year, and also wanted to clarify.

Speaker Change: You were commenting on the man is good, but you made a decision to disrupt the customer experience and let Emma for her through naturally so that creates a good range of the outlet in a second half.

Jim Hollingshead: So I really wanted to understand kind of what you meant by that. Sorry, Travis, no.

Jim Hollingshead: So I really wanted to understand what you know. It's I hope I didn't say it that way. I meant the exact opposite of what you just said, which is, we don't want to disrupt the customer experience?

Jim Hollingshead: I hope I didn't say it that way. I meant the exact opposite of what you just said, which is we don't want to disrupt the customer experience. So what's going on with the specialty pharmacy launches? You know, we've used that kind of specialty pharmacy approach a couple of times in the past, especially as we entered pharmacy. We've actually upgraded the way we do it.

Jim Hollingshead: So I really wanted to understand kind of what you meant by that. Sorry, Travis, no. I hope I didn't say it that way. I meant the exact opposite of what you just said, which is we don't want to disrupt the customer experience. So what's going on with the specialty pharmacy alliances? You know, we've used that kind of specialty pharmacy approach a couple of times in the past.

Jim Hollingshead: So what's going on with the specialty pharmacy launches? You know, we've used we've used that kind of specialty pharmacy approach. A couple of times in the past, especially as we entered pharmacy, we've actually upgraded the way we do it. So with this launch and with, you know, this is the first time that we've brought kind of a new compatibility to the pot into the same channel under the same reimbursement code. And so figuring out how to feather that in and focus our built inventory on new customers has been what we've been designing to do. And we decided to take that into pharmacy into the specialty pharmacies because it allows us to focus on new starts rather than driving a lot of conversion in the base, which doesn't grow our customer base.

Ana Chadwick: As it relates to our US revenue expectations, we estimate approximately half of our beat versus the high end of our guidance was due to our strong commercial execution. The other half was due to pricing benefits from channel mix as well as fewer G6 pod returns than anticipated. Our underlying growth is strong. We have significant momentum and we are thrilled to have expanded our product offerings and provide greater choice for our customers. With our lead position in the market and the many catalysts for us this year, we are in a great position to continue to deliver robust revenue and customer base growth in 2024 and well beyond.

Travis Steed: We've actually upgraded the way we do it, so with this launch, and with, you know, this is the first time that we've

Jim Hollingshead: And so, you know, this is the first time that we've brought kind of a new compatibility to the pot into the same channel under the same reimbursement code. And so figuring out how to feather that in and focus our built inventory on new customers has been what we've been designing to do. And we decided to take that into the specialty pharmacies because it allows us to focus on new starts rather than driving a lot of conversion in the base, which doesn't grow our customer base.

Speaker Change: brought kind of a new compatibility to the pot into the same channel under the same reimbursement code. And so figuring out how to feather that in and focus.

Speaker Change: Our built inventory on new customers has been what we've been designing to do, and we decided to take that into the specialty pharmacies because it allows us to focus on new starts rather than driving a lot of conversion in the base, which doesn't grow our customer base, right? So by taking it through specialty pharmacy...

Jim Hollingshead: So by taking it to specialty pharmacy, we're focusing on growing our new customer base, which is really important to the business and brings new customers into the market. And as we did that, it wasn't third of us as we planned it because it was the first time what the dynamic would be. The dynamics, great. We're actually really well able to service very strong demand for G7 to specialty pharmacies. And saying that, I should also point out those specialty pharmacies; most of them were through multiple pharmacies there through a kind of a hub service that we've set up.

Jim Hollingshead: So by taking it through specialty pharmacy, we're focusing on growing our new customer base, which is really important to the business and brings new customers into the market. And as we did that, it wasn't clear to us as we planned it because it was the first time what the dynamic would be. And it's great.

Speaker Change: We're focusing on growing our new customer base, which is really important to the business and brings new customers into the market.

Jim Hollingshead: We're actually really well able to service very strong demand for G7 through specialty pharmacies. And in saying that, I should also point out that those specialty pharmacies are mostly through multiple pharmacies there through a kind of a hub service that we've set up. And most of them are not visible to third-party data.

Ana Chadwick: Turning to international we achieved international omnipot revenue growth of 24%. This results were once again well above our expectations. While omnipot dash is doing very well internationally and remains a sizable percentage of our overall international volume, omnipot 5 demand is very high and fueling our growth. Last year's launch in the UK and German are driving both revenue and new customer start growth. Although early the increased demand we're seeing in France as a result of our recent omnipot 5 launch is very encouraging.

Speaker Change: And as we did that, it wasn't clear to us as we planned it, because it was the first time, what the dynamic would be. The dynamic's great. We're actually really well able.

Speaker Change: to service very strong demand for G7 through specialty pharmacies and in saying that I should also point out

Speaker Change: Those specialty pharmacies, the most of them, were through multiple pharmacies there through a kind of a hub service that we've set up and most of them are not visible to third party data, so if people are out there trying to wash our new customer starts.

Jim Hollingshead: And most of them are not visible to third-party data. So if people are out there trying to watch our new customer starts, they won't be able to see most of our G7 start through other reporting mechanisms, for example, like IQVS. So demand is really good. And it's flowing so well, and we can flex it. And so that customer experience has been great. Therefore, we've decided not to force inventory into the retail channel, which would be potentially disruptive both for our channel partners and for customers. So we're going to specialty pharmacy; it's going very well, and we're going to let the inventory transition and retail at a more natural pace.

Jim Hollingshead: So if people are out there trying to watch our new customers start, they won't be able to see most of our G7 customers through other reporting mechanisms, for example, like IQVIA. So demand is really good, and it's flowing so well, and we can flex it. And so the customer experience has been great. Therefore, we've decided not to force inventory into the retail channel, which would be potentially disruptive both for our channel partners and for customers.

Speaker Change: They won't be able to see most of our G7 start through other reporting mechanisms, for example, like IQVIA. So demand is really good, and it's flowing so well, and we can flex it. And so that customer experience has been great.

Ana Chadwick: Together with our rollout of omnipot 5 we delivered two plus in two of our markets around the start of to queue, we are well positioned for continued growth. International utilization trends were slightly higher than in prior year due to higher initial omnipot 5 orders similar to what we saw last year in the US but to a smaller degree. On a reported basis foreign currency was 90 basis points headwind over the prior year and approximately 110 basis points favorable versus our guide.

Speaker Change: Therefore, we've decided not to force inventory into the retail channel, which would be potentially disruptive both for our channel partners and for customers.

Jim Hollingshead: So we're going through specialty pharmacy. It's going very well. And we're gonna let the inventory transition and retail at a more natural pace. So that's why it's really because of new customers. We wanna deliver the strongest possible customer experience, and we're really happy with how specialty pharmacy is. So that's the question. On the first part of your question, year-over-year growth, I think we expect it to cross over into year-over-year growth during the second half. It's hard to call exactly when that happens, but the expectation is that yes, we will get into year-over-year growth in the second half.

Speaker Change: So, we're going through Specialty Pharmacy, it's going very well, and we're going to let the inventory transition in retail at a more natural pace. So that's why it's really because of new customer, we want to deliver the strongest possible customer experience, and we're really happy with how Specialty Pharmacy is going.

Jim Hollingshead: So that's why it's really because of the customer we want to deliver the strongest possible customer experience, and we're really happy without specialty pharmacies.

Speaker Change: So that's on that question. On the first part of your question, you're over your growth. I think we expect during the second half to cross over into your over your growth. It's hard to call exactly when that happens. But the expectation is yes, we get into your over your growth in the second half.

Ana Chadwick: Drop delivery revenue was $8 million which was above our guidance range partially due to an increase in orders from our partner and timing of production. Growth margin was 67.7 percent up 90 basis points primarily driven by pricing benefits in both the US pharmacy channel and our international markets as well as ongoing manufacturing efficiency. Partially of setting this growth was a one time charge of 13.5 million dollars or 280 basis points relating to components that are not expected to be utilized.

Michael Polark: DeGroves, Michael; Pollark, Chris; Wolf Research. Your line is open. Okay, thank you. Okay, I'll ask a follow-up on the type two update. The decision to prioritize O5 over Go. I'm interested. Is your expectation that the secure T2D label or that data will allow you to market to both the MDI and based on only population? That's one question. And then the second piece is pricing. Would you expect kind of patient agnostic pricing for this product?

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

Speaker Change: And your next question comes from the line of Michael Pollark, with Wolf Research, your line is open.

Michael Polark: Thank you. Okay, I'll ask for a follow-up on the Type 2 update. The decision to prioritize O5 over Go, I'm interested in your expectation that the secure T2D label or that data will allow you to market to both the MDI and basal-only population? That's one question. And then the second piece is pricing. Would you expect a kind of... patient agnostic? Pricing for this product and the third is I heard about the investments in the back half to set the stage for the type two launch next year. Any way to frame how much you expect to expand headcount? through this process. Thank you so much.

Michael Pollark: Thank you. Okay, I'll ask a follow-up on the Type 2 update.

Michael Pollark: The decision to prioritize O5 over Go, I'm interested, is your expectation that the secure T2D label or that that data will allow

Michael Pollark: You to market to both the MDI and based on the only population, that's one question, and then the second piece is pricing, would you expect kind of...

Ana Chadwick: This charge resulted from our strategic decision to go to market with Obbin Blood 5 instead of Obbin Blood Go to drive accelerated growth in Type 2 pending FDA clearance. Even with this charge, our execution throughout our global business is resulting in significant margin expansion, which strengthens our confidence in our margin trajectory over the long term as we continue to execute and scale efficiently. While operating operating expenses increased in the quarter as we invest in our business, including to support the cascade of innovations we've had this year and those to come, our level of spend with lower than we expected due to a timing shift into the second half of the year.

Michael Polark: And the third is I heard about the investments in the back half to set the stage for the type two launch next year. Any way to frame how much you expect to expand headcount through this process. Thank you so much.

Michael Pollark: patient agnostic

Speaker Change: pricing for this product and the third is I heard about the investments in the back half to set the stage for the type 2

Speaker Change: Launch next year. Any way to frame how much you expect to expand headcount.

Jim Hollingshead: Thanks, Mike. Thanks for the question. The first thing is, yeah, I don't want to get too far in front of the FDA on the actual label, but the label we anticipate would allow us to market to both intensive insulin users and basal insulin users. So that's the aim. And Secure T2D backs that up because 20% of the participants in Secure T2D were basal-only users, and they had fantastic results.

Michael Polark: Thanks, Mike. Thanks for the question. The first thing is, yeah, I don't want to get too far in front of the FDA on the actual label, but the label we anticipate would allow us to market to both intensive insulin and basal insulin users. So that's the aim. And security to D backs that up because 20% of the participants in security to D were basal-only users, and they have fantastic results. And so the goal of O5 is to get out there and help people who are on insulin who need better control because of the fantastic Smart Adjust algorithm and its ability to, as you know, adjust both basal and adjust for real time goalless.

Speaker Change: through this process. Thank you so much.

Speaker Change: Thanks for the question. The first thing is, yeah, I don't want to get too far in front of the FDA on the actual label, but the label we anticipate would allow us to market.

Michael Pollark: to both intensive insulin and basal insulin users. So that's the aim and secure T2D back that up because 20%.

Jim Hollingshead: And so the goal of Omnipod 5 is to get out there and help people who are on insulin who need better control because of the fantastic Smart Adjust algorithm and its ability to, as you know, adjusts both basal and it adjusts for miltimesbolus. And so that's the goal. And therefore, if we're able to achieve that labeling, we can help basal-only patients with Omnipod 5. And I know that you know that the initial plan was to start people on Omnipod Go, and then as their insulin needs change, get them onto Omnipod 5.

Michael Pollark: of the participants in SecureT2D were Basel-only users, and they had fantastic results. And so the goal of OmniPot5 is to get out there and help people who are on insulin who need better control because of the fantastic smart adjusts.

Ana Chadwick: In order to drive the above market growth, we have been delivering, we will continue to invest in our business. At the same time, we are achieving operating margin expansion, resulting from our revenue performance, growth margin improvements, and the operational leverage we are realizing throughout our business. Operating margin was 11.2%, and adjusted EBITDA was 18.6% of revenue, both exceeding our expectations, primarily due to our revenue performance and the shift in timing of spend. Expansion of this metrics was partially upset by the one-time charge of $13.5 million or 280 basis points related to Obbin Blood Go.

Speaker Change: algorithm and its ability to, as you know, it adjusts both basal and it adjusts for for mil-times bolus. And so so that's the goal and that therefore if we're able to achieve that labeling we can help basal only patients with Omnipod 5 and I know that you know

Jim Hollingshead: And so, so that's the goal. And that, therefore, if we're able to achieve that labeling, we can help basal-only patients with Omnipod 5. And I know that you know the initial plan was to start people on Omnipot Go. And then, as their insulin needs changed, get them on the Omnipod 5. And the beauty of this strategy is that we don't have to wait to have people going on Omnipot 5. You know, contingent on FDA labeling, which we expect. And I don't want to get in front of it. And all those caveats. We think we can just, we don't have to wait for Omnipot 5.

Speaker Change: The initial plan was to start people on Omnipot Go, and then as their insulin needs changed...

Jim Hollingshead: And the beauty of this strategy is that we don't have to wait to have people go on Omnipod 5, you know, contingent on FDA labeling, which we expect, and I don't want to get in front of it and all those caveats. We think we can just, we don't have to wait for Omnipod 5, we can just take it to market as Omnipod 5 and meet the needs of a very wide, wider range of patients than we were going to be able to meet. So we're excited about that. And I've already forgotten the second part of your question, so go ahead. No, I just wanted to add, maybe, a comment there.

Michael Pollark: Get them onto Omnipod 5, and the beauty of this strategy is that we don't have to wait to have people go on Omnipod 5.

Michael Pollark: Contingent on FDA labeling, which we expect and I don't want to get in front of it, and all those caveats, we think we can just, we don't have to wait for Omnipod 5, we just take it to market as Omnipod 5 and meet the needs of a very wider range of patients than we were going to be able to meet, so we're excited about that.

Jim Hollingshead: We just take it to market as Omnipot 5 and meet the needs of a very wide range of patients. Then we were going to be able to meet.

Ana Chadwick: Last quarter, we provided color that due to our positive earnings trend, we may find at some point in the year that the valuation allowance we had against our deferred past assets may no longer be required. In Q2, we reached this conclusion, and therefore, we released the majority of our valuation allowance, resulting in a non-cash tax benefit of approximately 150 million in the period, which we adjusted out for non-gas purposes. We expect another 30 million to be recognized during the remainder of the year. We now expect our 2024 effective tax rate, excluding the full 180 million to be in the range of 20 to 25%.

Jim Hollingshead: So we're excited about that.

Ana Chadwick: And I'm forgotten already the second part of your question. No, I just wanted to add maybe a comment there. When you think of the implications of that decision, it's not just a short-term impact that we just talked about. There's a much longer-term impact. Jim commented on the customer commercial, the things that there's also an operational impact in the company with less product life cycle. Simpleer in terms of our manufacturing capacity and operational and all those things that come along with that. So it's going to have its fruits much longer into into the 2025. Yeah, we were really excited about being able to go on to the Omnipot 5 platform as the flagship offer there.

Speaker Change: and I'm forgetting already that I've been part of your question, so go on. No, I just want to do ad may be a comment there. When you think of the implications of that decision, it's not just a short-term impact that we just talked about. There's a much longer-term impact.

Jim Hollingshead: When you think of the implications of that decision, it's not just the short-term impact that we just talked about. There is a much longer-term impact. Jim commented on the customer, commercial, all of those things, but there's also an operational impact in the company with a shorter product lifecycle, and it's simpler in terms of our manufacturing capacity and operations and all those things that come along with that. So it's going to have its fruits much longer into 2025.

Jim Hollingshead: Jim commented on the

Jim Hollingshead: Customer, commercial, all of those things, but there's also an operational impact in the company with

Jim Hollingshead: Less product life cycles.

Speaker Change: Simpler in terms of our manufacturing capacity and operational and all those things that come along with that so it's going to have its fruits much longer into into the 2025. Yeah we were really excited about being able to go on to the Omni Pod 5 platform as the flagship offer there. I remember your other two components Mike so quickly on pricing.

Jim Hollingshead: Yeah, we're really excited about being able to go onto the OmniPod 5 platform as the flagship offer there. I remembered your other two components, Mike, so quickly on pricing. We don't anticipate. I mean, OmniPod 5 is already well-covered and well-reimbursed for people with type 2 diabetes.

Ana Chadwick: I remember you're on the two components, Mike. So quickly on pricing. We don't anticipate. I mean, I mean, five five is already well covered, well reimbursed for people with type two diabetes. There's right now there's no distinction, and we don't expect big commercial changes on that front. We'll see what happens. and the other side of that with the Salesforce. We've been successfully adding Salesforce heads now for some time. We added some earlier in the year. We'll continue to add Salesforce. We'll have more to say about the scale of that and the model for that as we get closer to actual launch.

Ana Chadwick: Turning to cash and liquidity, we ended the quarter with approximately 820 million in cash, and the full 300 million available under our credit facility. Last week, we successfully extended the maturity of our term loan B to August 2031, and reprise the loan at a lower interest rate, which will reduce cumulative interest expense over the term of the loan by approximately $17 million. Our commitment to drive profitable growth and positive free cash flow is paying off, resulting in our ability to expand margins and strengthen our overall financial profile.

Speaker Change: We don't anticipate, I mean, Omnium 5.5 is already well-covered, well-reimbursed for people with type 2 diabetes. Right now, there's no distinction, and we don't expect big commercial changes on that front. We'll see what happens.

Jim Hollingshead: Right now, there's no distinction, and we don't expect big commercial changes on that front. We'll see what happens, but we don't expect any disruption.

Jim Hollingshead: And then on the other side of that, with the sales force, you know, we've been adding, successfully adding sales force heads. Now for some time, we added some earlier in the year. We'll continue to add a sales force, and we'll have more to say about the scale of that and the model for that as we get closer to actual launch. And your next question comes from the line of Matt Taylor with Jeffreys. Your line is open. I thank you for the question. Maybe I could just further get some color and help clarify.

Speaker Change: but we don't expect any disruption.

Speaker Change: and then on the other side of that with the Salesforce, you know, we've been adding, we've been successfully adding Salesforce has now for some time, we added some earlier in the year, we'll continue to add Salesforce. We'll have more to say about the scale of that and the model for that as we get closer to actual launch.

Matt Taylor: And your next question comes from the line of Matt Taylor with Jefferies. Your line is open. Hi, thank you for the question. Maybe I could just further get some color and help clarify a couple of key things we've been talking about in the call. One is I didn't want to ask you about you mentioned channel mixed benefits in this quarter. And I'm wondering if you could talk about the source of those.

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

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

Ana Chadwick: Sure. I'll start with that one.

Ana Chadwick: Now turning to our 2024 outlook. For the full year, we're once again raising our expectations for total Obbin Blood revenue growth to a range of 18 to 21%. Representing a milestone of 2 billion in annual revenue at the high end of our range. As a result, we also are raising total company revenue growth to a range of 16 to 19%. Cronin. For U.S, omnipods, we're raising the low end of our revenue guidance and now expect a range of 18 to 21 percent growth.

Speaker Change: I thank you for the question.

Speaker Change: Maybe I could just...

Matt Taylor: and further get some color and help clarify a couple key things we've been talking about on the call. One is, I did want to ask you about, you mentioned, a channel mix benefit.

Ana Chadwick: And I guess with the outlook for that in the US and as a company, as you have a lot of shifting sand in terms of the different channels and how the mix could have all. Sure, I'll start with that one. So when you think of the US and we are very heavily penetrated now in the pharmacy channel, what we have is, you know, we ship product and then we have, of course, the wholesalers and distributors and the PBNs. And at the end, it's the end customer. So how it moves into which specific distributors with what relationships and which PBNs with what coverage.

Speaker Change: in this quarter and I wonder if you could talk about the source of those and I guess the outlook for that in the U.S. and as the as the company as you have a lot of shifting sand in terms of the different channels and how the mix could evolve.

Ana Chadwick: So, when you think of the U.S., and we are very heavily penetrated now in the pharmacy channel, what we have is, you know, we ship product, and then we have, of course, the wholesalers, the distributors, and the PBMs. And at the end, it's the end customer. So, how it moves into which specific distributors with what relationships and which PBMs with what coverage is hard to call. And now, what we're talking about is not huge dollars as I described in terms of the impact, but we should have some fluctuation in our pricing as we go through that process.

Speaker Change: Gerald, I'll start with that one.

Gerald: So when you think of the U.S. and we are very heavily penetrated now in the pharmacy channel.

Ana Chadwick: We expect growth to be driven primarily by continued strong demand for omnipod 5, including the benefits of the reoccurring revenue stream from our annuity model and growing customer base. As a reminder, we have a tougher comparison in the second half of 2025. Versus the prior year period, resulting from the estimated orders that were accelerated in the fourth quarter of 2023 from 2024. We continue to anticipate both revenue dollars and new customer starts in the second half of 2024 to be higher than levels in the first half.

Gerald: What we have is, you know, we ship product and then we have, of course, the wholesalers and distributors and the PBMs.

Speaker Change: and at the end it's the end customer. So how it moves into which specific distributors with what relationships and which PBS with what coverage.

Ana Chadwick: That that all is hard to call. And now what we're talking about is not huge dollars. What I described in terms of the impact, but we should have some fluctuation in our pricing as we go through that process. So we will continue to refine our models and just continue to get better and better around that. But it's really a simple dynamic of being now so heavy into the pharmacy channel.

Speaker Change: That all is hard to call. And now what we're talking about is not huge dollars, what I described in terms of the impact, but we should have some fluctuation in our pricing.

Speaker Change: As we go through that process, so we will continue to refine our models and just continue to get better and better around that, but it's really a simple dynamic of being now so heavy into the pharmacy channel.

Ana Chadwick: While we continue to expect sequential growth in new customer starts in both Q3 and Q4, our guidance now contemplates a less steep ramp of new customer starts in the second half of 2024 driven by both the overall market reduction in competitive switching that Jim referred to and the slightly longer facing period of our G7 pots through our retail channel partners. While the latter has a temporary impact on new customer starts during the second half, it is simply timing.

Chris Pasquale: And your next question comes from Chris Pasquale with Nefron. Your line is open. Thanks.

Ana Chadwick: So, we will continue to refine our models and just continue to get better and better around that. But it's really a simple dynamic of being now so heavy into the pharmacy channel. And your next question comes from Chris Pasquale with Nefron. Your line is now open. Thanks.

Chris Pasquale: And your next question comes from Chris Pasquale with Nephron. Your line is open. Thanks.

Matt Taylor: And your next question comes from Chris Pasquale with Nefron. Your line is open.

Chris Pasquale: And one on international and one on the go decision. I know US; you know, by our math, your international install base share is well below where you are in the US. I'm curious, though, when we look at that overall international market, what percentage of those patients are in geographies where you have a presence today. In other words, how much of that pie are you really able to compete for?

Chris Pasquale: Thanks, and one on International and one on the Go Decision.

Speaker Change: I know you as, you know, by our math, you're international.

Speaker Change: installed base share is well below where you are in the U.S.

Chris Pasquale: I'm curious though when we look at that overall international market, what percentage of those patients are in geographies where you have a presence today? In other words, how much that pie are you really able to compete for?

Jim Hollingshead: Yeah, thanks, Chris. I'm internationally, you know, as you know, we're only in 24 markets, oh, US. And the larger markets are obviously, you know, the, you know, the usual suspects of large markets: UK, Germany, France, Nordics. And so we're, we're in the UK is only five five down in Germany with full releases and, you know, growing really, really well. France, we're just, we're just out of the gate with the Omnipod five launch in France. And then, as we said in the prepared remarks, Nordics is on the list for coming launches. And then, you know, and you can just by population, I think all the meant that markets are fairly similar in terms of total opportunity.

Jim Hollingshead: Yeah, thanks, Chris. Internationally, you know, as you know, we're only in 24 markets, OUS. And the larger markets are obviously, you know, the usual suspects of large markets, UK, Germany, France, Nordics. And so we're in the UK with Omnipod 5 now in Germany, with full releases and, you know, growing really, really well. France, we're just out of the gate with the Omnipod 5 launch in France.

Ana Chadwick: We are confident this strategy will maximize the customer and HCP experience, which is our top priority, while having the added benefit of limiting returns of the G6 pots in the channel. Our revenue guidance continues to assume a gradual restocking in the second half of this year as we expand our distribution of G7 pots throughout all our channel partners. For international audit pod, we are raising our revenue growth expectations by 600 basis points to a range of 18 to 21%.

Speaker Change: Yeah, thanks Chris. I internationally, you know, as we know, we're only in 24 markets, OUAs.

Gerald: And the larger markets are obviously, you know, the usual suspects of large markets, UK, Germany, France, Nordics.

Speaker Change: and so we're in the UK of 35 now in Germany with full releases and you know, growing really, really well. France, we're just, we're just out of the gate with the 505 launch in France and then as we said in prepare for Mark's Nordics is on the list for coming launches.

Jim Hollingshead: And then, as we said in prepared remarks, Nordics is on the list for coming launches. And then, you know, and you can just by population, I think all MedTech markets are fairly similar in terms of total opportunity. So we feel really good about where we are with Omnipod 5. It's clearly winning where we take it.

Gerald: and then, you know, you can, just by population, I think all the mental markets are probably similar in terms of total opportunity.

Jim Hollingshead: So we feel really good about where we are with Omnipod five. It's clearly winning where we take it. And as we roll it out, we're very bullish on growth, which is what led us to another 600 basis point increase guide.

Gerald: So we feel really good about where we are with Omni-5, it's clearly winning where we take it and as we roll it out, we're very bullish on growth, which is what led us to another 600 basis point increase in guide.

Ana Chadwick: On a reported basis, we now assume there will be no foreign currency impact. We anticipate revenue growth to be driven by the strong momentum from last year's omnipod 5 launches in the UK and Germany, partially offset by headwinds in countries where we do not yet have omnipod 5. Our 2024 outlook for international business is strengthened every day by the success we are achieving with omnipod 5. Greater than expected new customers starts today as well as revenue outperformance have resulted in raising our international omnipod outlook by 1100 basis points since the start of 2024.

Mike Kratke: And your next question comes from the line of Mike Kratke with Learning Partners. Your line is open. Hi, everyone. Thanks for taking our questions. Maybe just a couple on the Type-2 launch.

Mike Kratky: And your next question comes from the line of Mike Kratky with Lyrinc Partners. Your line is open.

Jim Hollingshead: And as we roll it out, we're very bullish on growth, which is what led us to another 600 basis point increase in guide. And your next question comes from the line of Mike Kratky with Lyrinc Partners. Your line is open. Hi, everyone. Thanks for taking our questions. Maybe just a couple on the Type 2 launch.

Speaker Change: And your next question comes from the line of Mike Kratky with Lering Partners. Your line is open.

Mike Kratky: Hi everyone, thanks for taking our questions.

Mike Kratke: You know, first of all, is your plan to implement a full commercial launch in Type-2, once you get approval, or could that be a more sequence launch? And then maybe just a quick one on the Bayes of Lonely Population, but, you know, based on the updates today, can you provide some color on the level of demand that you suffer, you know, pumps in the Bayes of Lonely Population? And does that change your outlook at all as you think about Omni-5-5? Thanks, Mike. In terms of, you know, in terms of a full-blown launch, I mean, what we've done is we've choreographed our plan for the launch in line with what we expect in terms of FDA approval.

Mike Kratky: Maybe just a couple on the Type 2 launch, you know, first of all, is your plan to implement a full commercial launch in Type 2 once you get approval, or could that be a more sequenced launch, and then maybe just a quick one on the basal only population, but, you know, based on the updates today, can you provide some color on the level of demand that you saw for

Speaker Change: You know pumps in the basal only population and does that change your outlook at all as you think about OmniPOD 5?

Ana Chadwick: Omnipod 5 is gaining traction and taking shares. Feedback has been tremendous and we are clearly a leader with our advanced technology. While we expect our most recent omnipod 5 launches to contribute to new customers start in the second half of this year, given the nature of our annuity model, we expect them to contribute even more meaningfully to revenue in 2025.

Jim Hollingshead: Thanks, Mike. In terms of the full-blown launch, I mean, what we've done is we've choreographed our plan for the launch in line with what we expect in terms of FDA approval. And so we expect FDA approval by the end of the year. And once we have that, and with all the other pieces in place in terms of things like Salesforce training and so on, we'll be able to promote in line with that.

Speaker Change: Thanks, Mike. In terms of, you know, in terms of Fulcrum Launch, I mean, I...

Speaker Change: What we've done is we've choreographed our plan for the launch in line with what we expect in terms of FDA approval. And so we expect FDA approval by the end of the year. And once we have that and with all the other pieces in place in terms of things like Salesforce training and so on, we'll be able to promote.

Jim Hollingshead: And so, we expect FDA approval by the end of the year. And once we have that, and with all the other pieces in place, in terms of things like Salesforce training, and so on, we'll be able to promote in line with that. But we also anticipate, and as I said, we'll get more details; we get closer to that. We anticipate also expanding our sales reach into non-specialty channels by adding some feed on the street. And that just gives us more share of voice into those markets. And so, we'll have more to say about that later, but we do anticipate being able to promote as we get clearance.

Ana Chadwick: O.K. Our incredible momentum internationally strengthens our confidence that Omniplug 5 will drive further growth and share gain in every market in which we launch. For both, US and international Omniplug are guidance factors in quarterly revenue fluctuations resulting from the many product launches we have in 2024. This includes ramping inventory in the channels for new launches and reducing levels of prior Omniplug generations.

Gerald: Uh, in line with that.

Gerald: But we also anticipate, and as I said, we'll say more, we'll give more detail as we get closer to that.

Jim Hollingshead: But we also anticipate, and as I said, we'll say more, we'll give more detail as we get closer to that, expanding our sales reach into non-specialty channels by adding some feet on the street. And that just gives us more share of voice in those markets. And so we'll have more to say about that later. But we do anticipate being able to promote as we get closer. The second side of your question around... Basil, thank you.

Gerald: We anticipate also expanding our sales reach into non-specialty channels by adding some feet on the street.

Gerald: And that just gives us more share voice into those markets. And so we'll have more to say about that later. But we do anticipate being able to promote as we get clearance.

Jim Hollingshead: The second side of your question around Basil, thank you. With Basil, you know, in Omni-5-5-5 pilot, we were out there looking at how do patients present in the channel? And we saw a number of patient profiles. So we went in with a draft patient profile that I won't try to detail. We added a patient profile to that. And what we found was that there are a lot of patients in the non-specialty channel. There's different patient profiles type two diabetes that need insulin. And there's also a lot of type one patients in there. So we're very confident that there's a lot of patients whose needs we can address with Omni-5-5.

Speaker Change: Um, the second side of your question, around...

Jim Hollingshead: With Basil, you know, in the Omnipi Go pilot, we were out there looking at how patients presented in the channel, and we saw a number of patient profiles. So we went in with a draft patient profile that I won't try to detail. We then added a patient profile to that, and what we found was that there are a lot of patients in the non-specialty channel. There are different patient profiles with type 2 diabetes that need insulin, and there's also a lot of type 1 patients in there.

Ana Chadwick: Lastly, for drug delivered, our outlook has improved and we now expect a decline in the range of 40 to 50 percent, reflecting our partners' revised forecast. Turning to 2024 gross margin, given our strong margin performance in the first half of 2024 and the retirement of some breeze we had modeled related to our product launches and new manufacturing facilities, we have greater confidence in our full year 2024 outlook. As a result, we now expect to land closer to the high end of our 68 to 69 percent range, even with the 70 basis points analyzed impact from the second quarter Omniplug GO charge.

Gerald: [inaudible]

Gerald: With Basil, you know, in the OmniPOD Go pilot, we were out there looking at

Gerald: How do patients present in the channel? And we saw a number of patient profiles. So we went in with a draft patient profile that I won't try to detail. We then, we added a patient profile to that. And what we found was that there are a lot of patients in the non-specialty channel. There's different patient profiles, type two diabetes that need insulin. And there's also a lot of type one patients in there. So we're very confident that there's a lot of patients whose needs we can address with Omnipod 5. And if anything, I would say.

Jim Hollingshead: So we're very confident that there are a lot of patients whose needs we can address with Omnipod 5, and if anything, I would say focusing on Omnipod 5 makes us even more bullish about our ability to penetrate that market. So we learned a lot as we were in those practices about what's happening there and which kinds of patients are there, and we're really excited about taking Omnipod 5 as the flagship product for the patient journey into those channels and reaching those patients.

Jim Hollingshead: And if anything, I would say focusing on to Omni-5-5 makes us even more bullish about our ability to penetrate that market. So we learned a lot as we were in those practices about what's happening in there and which kinds of patients are in there. And we're really excited about taking Omni-5-5 as the flagship product for the patient journey into the market. So we're really excited about taking those into those channels and to reach those patients.

Gerald: focusing onto Omnipod 5 makes us even more bullish about our ability to penetrate that market. So we learned a lot as we were in those practices about what's happening in there and which kinds of patients are in there. And we're really excited about taking Omnipod 5 as the flagship.

Gerald: product for the patient journey into those into those channels and to reach those patients.

Jayson Bedford: And your next question comes from the line of Jayson Bedford with Raymond James. Your line is open.

Jason Bedford: And your next question comes from the line of Jason Bedford with Raymond James. Your line is open. Good afternoon. I've got 15 clarifying questions. I'm just kidding. Just a couple of type twos. I've seen any benefit from the type two data that you presented at ADA in late June. And then second, you see more confident in the timing of type two approval from Omni-5-5. Just to be clear, you're confident that reimbursement is in place. There's not going to be a lag in adoption because they're reimbursement. Thanks. Thanks, Jason. And thanks for the non-15 question list.

Jayson Bedford: And your next question comes from the line of Jayson Bedford with Raymond James. Your line is open. Hi, good afternoon. I've got 15 clarifying questions. I'm just kidding. Um, just, uh, just.

Speaker Change: And your next question comes from the line of Jason Bedford with Raymond James. Your line is open.

Jason Bedford: Good afternoon. I've got 15 clarifying questions.

Jason Bedford: and I'm just

Jason Bedford: Union. Just, just-

Jason Bedford: Just quirky, couple of type 2s, are you seeing any benefit from the type 2 data that you presented at ADAA in late June, and then second, you see more confident in the timing of type 2 approval for from the quad five just to be clear, your confident that reimbursement is in place, there's not going to be a lag in adoption because of the reimbursement, thanks.

Ana Chadwick: Turning to our third quarter guidance, we expect total Omniplug growth of 21 to 24 percent and total company growth of 18 to 21 percent. For US Omniplug, we expect growth of 21 to 24 percent, primarily driven by strong demand for Omniplug 5, strong new customer starts, and the benefit of R&D model. For international Omniplug, we expect growth of 21 to 24 percent, driven by ongoing adoption of Omniplug 5, partially upset by headwinds in countries where we do not yet have Omniplug 5. On a reported basis, we now assume an unfavorable foreign currency impact of 100 basis points. Finally, we expect Q3 drop delivery revenue to be approximately $3 to $4 million.

Jim Hollingshead: Thanks, Jayson, and thanks for the non-15 question list. So on type 2, yes, we're very confident. I mean, type 2, Omnipot 5 right now is reimbursed through the pharmacy benefit. There's not a request for which type of diabetes. It's a script that's written for Omnipot 5, and it's very well covered on that basis, and that's why physicians are writing off-label for it. We did see an increase in MDI starts for type 2 patients in the quarter.

Speaker Change: Thanks, Jayson, and thanks for the non-15 question list. So on Type 2, yes, we're...

Jason Bedford: So, on type two, yes, we're very confident. I mean, type two Omni-5-5 right now is reimbursed through the pharmacy benefit. There's not a request for which type of diabetes. It's a script that's written from Omni-5-5. And it's very well covered on that basis. And that's why physicians are writing off-label for it. We did see an increase in MBI starts for type two patients in the quarter. We don't call out whether that's Omni-5-5, which has the full indication for use, or Omni-5-5. We did see some lift in MBI for type two.

Speaker Change: Um...

Speaker Change: We're very confident. I mean, Type 2, OmniPy5 right now is reimbursed through the pharmacy benefit.

Jason Bedford: There's not a request for which type of diabetes, it's a script that's written for Omnipod 5 and it's very well covered on that basis and that's why.

Speaker Change: Physicians are writing off-label for it.

Jason Bedford: We did see an increase in MDI for type 2 patients in the quarter.

Jim Hollingshead: We don't call out whether that's Omnipot Dash, which has the full indication for use, or Omnipot 5, but we did see some lift in MDI for type 2. We are not promoting Omnipot 5 for type 2 diabetes because we do not yet have the indication for use expansion that would allow us to do that, and our reps, as I've said before, have one arm tied behind their backs for that, so we're really bullish on that. We have seen some lift, and we think that coverage should be fine out of the gate. There shouldn't be any delay in coverage for Omnipot 5 and type 2.

Gerald: Um, we don't call out whether that's Omnipod Dash, which has the full indication for use or Omnipod 5, we did see, we did see some lift and MDI protect you, we are not promoting Omnipod 5 for type 2 diabetes, because we do not yet have the indication for use expansion that will allow us to do that and our reps, as I've said before, have one arm type behind their back, that's where we're really, we're really bullish on that, but we, we have seen some lift and we, and we think that coverage coverage should be fine out of the other, shouldn't be any delay in coverage. For Omnipod 5 in type 2.

Ana Chadwick: In conclusion, our global insulating continues to execute and drive strong results. We generate a robust new customer starts globally, and our cascade of innovations transcends our position to deliver sustained revenue growth and margin expansion this year and beyond.

Jim Hollingshead: We are not promoting Omni-5-5 for type two diabetes because we do not yet have the indication for use expansion that will allow us to do that. And our reps, as I've said before, have one arm type behind their back for that. So we're really bullish on that. But we have seen some lift. And we think the coverage should be fine. There shouldn't be any delay in coverage for Omni-5-5.

Operator: With that operator, please open the call for questions. Thank you.

Operator: If you have a question at this time, please press star one on your touch tone telephone. If your question has been answered or you wish to remove yourself from the Q, press star one a second time. We are limiting each participant's question to one. However, please feel free to go back into Q, and if time permits, we will be more than happy to take your follow-up questions at that time. Again, it is star one if you would like to join the Q.

Matthew O'brien: Andrew, your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open. Thanks for taking the question, and I'm so sorry I do have a clarifying one. What's this inventory tail? And you should be getting in the second half of the year. I'd love to know about that. And then my main question is really on the MDI side. If I look at the results for you guys for a couple of your competitors, it looks like the MDI penetrate rates are starting to accelerate. First of all, is that true? Secondly, what's driving it?

Matthew O'brien: And your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open.

Matthew O'brien: And your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open. Thanks for taking the question. And I'm so sorry, I do have a clarifying one. What's this inventory tail end you should be getting in the second half of the year? I would love to know about that.

Gerald: and your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open.

Matthew O'brien: Thanks for taking the question, and I'm so sorry I do have a clarifying one. What's this inventory tail end you should be getting in the second half of the year? I'd love to know about that. And then my main question is really on the MDI side.

Speaker Change: If I look at the results...

Speaker Change: For you guys, for a couple of your competitors, it looks like the MDI

Speaker Change: Penetration rates are starting to accelerate, first of all, is that true, secondly, what's driving it, is that new technologies and just how durable is it between type ones and type 2's just give it how important it's going to be for you guys go forward as you grow your business. Thanks.

Robbie Marcus: And your first question comes from the line of Robbie Marcus with JP Morgan. Your line is open. Oh great, thanks for taking the questions and congrats on a really nice quarter. I want to ask some clarifying questions here. I'll just get them all in.

Matthew O'brien: Is it new technologies? And just how durable is it between Type Ones and Type Two? It's just given how important it's going to be for you guys. Go forward as you grow your business. Thanks. Thanks, Matt.

Ana Chadwick: Thanks Matt. So as we talked about last quarter, we were anticipating a destocking of about 10 million, which we saw happen during the second quarter. And what we anticipate is, during the second half of the year, that should come back. And the reason is it's all around the G6-G7 transition and how we're managing the channels through that process.

Jim Hollingshead: So I'll start with your comment on inventory tailwind. So, as we talked about last quarter, we were anticipating a destocking of about 10 million, which we saw happen during the second quarter. And what we anticipate is, during the second half of the year, that should come back. And the reason is all around the G67 transition and how we're managing the channels through that process. Thanks, Matt.

Speaker Change: Thanks Matt, so I'll start with your comment on inventory tailwind, so as we talked about last quarter we were anticipating

Jim Hollingshead: First, you know, gross margin would have been something closer to 70 and a half percent in operating margin and EBITDA would have been materially higher without the one-time charge to write down the inventory. I guess what was the reason to leave it in and not back it out. I think most companies would have backed it out. And then second, I think there's just a little confusion on the commentary around the new patient ramp in the second half.

Speaker Change: A destocking of about 10 million, which we saw happen during the second quarter, and what we anticipate is during the second half of the year, that should come back.

Speaker Change: And the reason is, is all around the...

Jim Hollingshead: Maybe you could just add a little clarifying commentary to that. Is it less new patients? Is it related to type two specifically? Is it competitive switches? Just make it crystal clear the view and can you grow new patients year over year. Thanks a lot. Thanks Robbie. It's great to have you having on the call. Thanks for your question and thanks for your congrats.

Speaker Change: of G6G7 transition and how we're managing the channels through that process.

Ana Chadwick: Thanks, Matt. On the MDI question, you know, I won't try to cobble together any of our competitors' results. I'll just say that I think it's reasonable to think that MDI penetration in type 1 is accelerating, and we're clearly leading that. You know, so Omnipod 5 is very highly preferred by MDI patients. We continue to grow that space, and we continue to win with MDI conversions. I think it's durable for both type 1 and type 2, and the reason I believe that is because the burden of living with diabetes remains very high and because our CGM partners have been out paving the road very effectively in front of us for some time.

Jim Hollingshead: On the MDI question, I won't try to cobble together any of our competitors' results. I'll just say that I think it's reasonable to think that MDI penetration in type one is accelerating and work clearly leading that. So Omnipot 5 is very highly preferred with MDI patients. We continue to grow that space, and we continue to win with MDI conversions. I think it's durable for both type one and type two. And the reason I believe that is because the burden of living with diabetes remains very high. And because our CGM partners have been outpaving road very effectively in front of us for some time.

Speaker Change: Thanks Matt, on the MDI question, you know, I won't try to follow together any of our competitors results, I'll just say that I think it's reasonable too.

Speaker Change: to think that MDI penetration in type 1 is accelerating and we're clearly leading that. You know, so Omnipod 5 is very highly preferred with MDI patients. We continue to grow that space and we continue to win with MDI conversions.

Jim Hollingshead: I'll start on the new customer start question and then I'll hand back to Anna to talk about the margin and the one-time charge. So a new customer starts. We're trying to describe what we see in the market really, really clearly. And the first thing is we had we had good sequential increase in new customer starts which was our goal and we hit along those guides. What we're seeing in the market, we're trying to characterize the trend we're seeing in the market.

Speaker Change: I think it's durable for both life one and life two and the reason I believe that is because

Speaker Change: The burden of living with diabetes remains very high, and because our CGM partners have been out paving the road very effectively in front of us for some time. And so, we've said before that we think penetration for AID in the Type 1 space can go very high, well above 70% on the back of the paved road from CGM, and we're confident that we're going to be the leader that drives that kind of penetration.

Jim Hollingshead: And so we've said before that we think penetration for AID in the type one space can go very high. So that will above 70% on the back of the paid road from CGM. And we're confident that we're going to be the leader that drives that kind of penetration. And we believe that, you know, now you see a lot of adoption in the type two space with CGMs on an ongoing basis. And so our two partners have an index camera out there paving road for us in type two, and we see a big opportunity to take Omnipot 5 likely as the first to market AID system in that space.

Ana Chadwick: And so we've said before that we think penetration for AID in the type 1 space can go very high, well above 70% on the back of the paved road from CGM, and we're confident that we're going to be the leader that drives that kind of penetration. And we believe that, you know, now you see a lot of adoption in the type 2 space with CGMs on an ongoing basis, and so our two partners, AVID and Dexcom, are out there paving the road for us in type 2, and we see a big opportunity to take Omnipod 5, likely as the first-to-market AID system in that space.

Jim Hollingshead: So we were up in MDI in both type one and type two and looking to the quarter, what we see is a dynamic where just in the install base and market-wide competitive switching for patients already in the install base is down. And there was some question as we've looked at the data to what extent that was seasonality of last couple of quarters. But I think looking back, we can see that it's just clear that the total pool of competitive switchers is just down.

Speaker Change: And we believe that, you know, now you see a lot of adoption in the Type 2 space with CGMs on an ongoing basis, and so...

Speaker Change: Our two partners, Abbott and Dexcom, are out there paving the road for us in Type 2, and we see a big opportunity to take Omnipod 5. Likely as the first-to-market AID system in that space, we see a big opportunity to drive the penetration of Omnipod 5 in Type 2 as well.

Jim Hollingshead: We see a big opportunity to drive the penetration of Omnipot 5 in type two as well.

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

Steve Lichtman: And your next question comes from the line of Steve Lickman with Oppenheimer. Your line is open. Thank you. Even everyone on the international strength you are seeing versus you're thinking heading into the year. Are you seeing better reimbursement and pricing in addition to faster new patient growth, or is it at all better volume? And can you remind us when you could have a G7 connectivity internationally. Thanks. Thanks, Steve. Yeah.

Ana Chadwick: We see a big opportunity to drive the penetration of Omnipod 5 in type 2 as well. And your next question comes from the line of Steve Lichtman with Oppenheimer. Your line is open. Thank you. Good evening, everyone.

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

Jim Hollingshead: And one of the reasons for that of course is that over the last several quarters we've grown our percentage of the install base really substantially. So there are a lot of omnipod users out there, mostly omnipod five users out there that are not targets for us to switch. But it's part of the market that it's a smaller part of the market overall and it's a smaller part of what's going on in the market.

Steve Lichtman: Thank you. Evening, everyone.

Steve Lichtman: On the international strength you are seeing versus you're thinking heading into the year, are you seeing better reimbursement and pricing in addition to faster new patient growth or is it all better volume? And can you remind us when you could have a G7 connectivity internationally? Thanks.

Jim Hollingshead: The important thing that we're trying to convey is that for us the play is MDI. And so if you think about it somewhere between eight or nine out of ten of our new customer starts are coming from MDI. And only about one new customer start comes out of competitive switching for us. And so that's very, very clear. That's our strategy. That's what we're trying to do. Omnipod five is so appealing. We're the player that's growing the market and we're clearly leading and we continue to clearly lead in MDI.

Jim Hollingshead: Thanks, Steve. Yeah, so what we've done, and we've referred to this in the past, as we launch Omnipod 5, we work really hard to make sure that our reimbursement is commensurate with the additional value that Omnipod 5 creates for the healthcare system and for patients. And so we've been able to, so far, so good, successfully negotiate a premium for Omnipod 5 where we've launched it. And so it is both volume and a bit of a price benefit. But volumes are very, very good, and obviously, the starts are very, very strong for us with Omnipod 5, where we've taken it. And then again, I'm forgetting the second half of these sentences.

Jim Hollingshead: So what we've done and we and we prefer to this in the past as we launch Omnipot 5. We work really hard to make sure that our reimbursement is commensurate with the additional value that Omnipot 5 creates for the healthcare system and for patients. And so we've been able to, so far, so good, successfully negotiate a premium from Omnipot 5 where we've launched it. And so it is both volume and a bit of a price benefit. And the points are very, very good. Obviously, you know, with the starts are very, very strong for us with Omnipot 5 where we've taken it.

Speaker Change: Thanks, Steve. Yeah, so what we've done, and we've referred to this in the past, as we launch OmniPOD 5, we work really hard to make sure that our reimbursement

Steve Lichtman: is commensurate with the additional value that Omnipod 5 creates for the health care system and for patients. And so we've been able to, so far so good, successfully negotiate a premium for Omnipod 5, or we've launched it. And so it is both volume and a bit of a price benefit.

Jim Hollingshead: Having said that, we also continue to win in the competitive switching game. We win more customers than we lose, but we're trying to characterize for all of you what we see happening as an overall trend in the market. Our play will continue to be to grow the market because Omnipod five allows us to bring more patients in and we clearly lead in that very consistent with our overall strategy.

Steve Lichtman: But volumes are very, very good, obviously, you know, with the starts are very, very strong for us with Omnibus 5 where we've taken it.

Jim Hollingshead: And then again, I'm forgetting the second half at least. G7. G7, we have an enhanced timing. So we're obviously working on it. We obviously have a very effective working G7 integration, which is creating a big tailwind for us in the US.

Jim Hollingshead: The G7 International. G7, we haven't announced timing. So we're obviously working on it. We obviously have a very effective working G7 integration, which is creating a big tailwind for us in the U.S. We'll get it into European markets as soon as we can, but we have not yet announced timing. And your next question comes from the line of Joanne Wuensch with Citibank. Your line is open. Good evening

Speaker Change: and then, again, I'm forgetting the second half of these days. Good evening, seven. Good evening, seven. G7, we have an enhanced timing. So we're obviously working on it, we obviously have a very effective working G7 integration which is creating a big talent for us in the U.S., we'll get it into European markets as soon as we can, but we have not yet announced timing.

Ana Chadwick: And did you want to pick up on that margin question? Sure. So absolutely, thank you Jim for that. The background here is we do not adjust for operational items, but what we try to do during the script and in our earnings press release is give you all the puts and takes. So the 280 basis points that flow through from gross margin to up margin for the quarter and for the full year, the 70 basis points. So you can see we're adjusting that one timer. We're executing incredibly well.

Jim Hollingshead: We'll get it into European markets as soon as we can, but we have not yet enough.

Jim Hollingshead: Thanks, Joanne. Yeah, we're very happy with our two CGM partners. We have a great relationship with Abbott. We also have a great relationship with Dexcom. We're working really well with both of them, and we're very excited to announce that we'll be bringing the Libre 2 Plus integration to the US market by the end of the year. And for us, we have, you know, a clear roadmap for Omnipod 5 platform expansion that includes sensor expansions, and it's full speed ahead. We remain very confident in our competitive position. Omnipod 5 is highly differentiated from two pumps, and will continue to be.

Joanne Wuensch: And your next question comes from the line of Joanne Wuensch with City Bank.

Joanne Wuensch: And your next question comes from the line of Joanne Wuensch with Citibank.

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

Joanne Wuensch: Your line is open.

Jim Hollingshead: Good evening. Thank you for taking the question, and very nice quarter. Yesterday, there was an announcement that I think took a lot of people by surprise: the agreement between the Toronto and Abbott. The love your opinion on how this changes or doesn't change the AID and really diabetes delivery landscape. Thanks. Thanks, Joanne. Yeah, we're very, we're very happy with our two CGM partners. We have a great relationship with Abbott. We have a great relationship with Dexcom. We're working really well with both of them. We're very excited to announce that we'll be bringing the Libre II Plus integration to the US market by the end of the year.

Joanne Wuensch: Good evening. Thank you for taking the question and very nice quarter.

Speaker Change: Yesterday there was an announcement that I think took a lot of people by surprise, the agreement between Medtronic and Abbott.

Jeff Johnson: Andrew, next question comes from the line of Jeff Johnson with Baird. Your line is open. Thank you.

Speaker Change: We'd love your opinion on how this changes or doesn't change the AID and really diabetes delivery landscape.

Jim Hollingshead: Jim, maybe I can ask another question on your new start comments and when I do one of the questions I'm going to apply for a quarter guidance. But on the new start, I think I heard you say that your new start were up disappointfully. I just want to confirm that and make sure that the US, a global or what number is that? And is that everything combined kind of the MBI plus competitive converts you put it all up and new starts overall to the company work up?

Speaker Change: Thanks, Joanne. Yeah, we're very happy with our two CGM partners. We have a great relationship with Abbott. We have a great relationship with Dexcom. We're working really well with both of them.

Speaker Change: We're very excited to announce that we'll be bringing the Libre 2 Plus integration to the U.S. market by the end of the year, and for us, we have, you know, a clear roadmap for Omnipod 5 platform expansion that includes sensor expansions, and it's full speed ahead.

Jim Hollingshead: And for us, we have a clear roadmap for Omnipot 5 platform expansion that includes sensor expansions. And it's full speed ahead. We're, we remain very confident in our competitive position. Omnipot 5 is extremely differentiated from two pumps. And we'll continue to be. And so we're very bullish, full speed ahead with both of our partners.

Jim Hollingshead: Either US or globally and then like I said, I have one question I fourth quarter. Yeah, so yeah, so Jeff, thank you for the question. New starts were up both in the US sequentially and internationally sequentially just to be clear.

Speaker Change: We remain very confident in our competitive position. Omnipod 5 is extremely differentiated from two pumps and will continue to be. And so we're very bullish, full speed ahead with both of our partners.

Jim Hollingshead: Okay, that's helpful. And then just on the implied fourth quarter guidance either for Anna or for you, Jim. You know, when I look at the US on the pod guidance, depending on what I pick is the midpoint or the point. I decide it depends three to you within your guidance. The implied kind of fourth quarter US on the pod grows probably who were from low single digits to low double digits. A bigger range there because we're taking a point estimate in three to you.

Bill Plovanic: And we have time for one last question. That will be from Bill Plovanic with Canaccord Genuity. Your line is open. Hey, great.

Operator: And so we're very bullish, full speed ahead with both of our partners. And we have time for one last question. That will be from Bill Plovanic with Canaccord Genuity. Your line is open. Hey, great. Thanks for taking my question and congratulations on a good one.

Bill Plovemich: And we have time for one last question. That will be from Bill Plovemich with Canacorn Genuity. Your line is open. Hey, great. Thanks for taking my question, and congrats on a good quarter. In terms of the growth.

Bill Plovanic: And we have time for one last question. That will be from Bill Plovanic with Canaccord Genuity. Your line is open.

Bill Plovanic: Hey, great, thanks for taking my question and congrats on a good quarter. In terms of the gross margin,

Ana Chadwick: And you know, from shifting over to Malaysia, how much growth margin longer-term benefits should we see from that? And then how much do you pick up by eliminating go, which potentially was a probably a lower. Gross profit product, I would assume, just kind of curious what that does for the longer term GMs, and thanks for taking my questions. Great.

Bill Plovanic: You know, from shifting over to Malaysia, how much gross margin longer term benefits should we see from that? And then how much do you pick up by eliminating Go, which potentially was a probably a lower

Jim Hollingshead: You obviously had anywhere from six to nine points, depending on how much we count the pull forward into 4Q23 last year, this kind of the year over your headwind. When I put all that in the house or it seems like you're kind of talking about fourth quarter US on the pod growth in the low to mid teams. You know, one is that a reasonable way to think about how you're thinking about adjusted US on the pod growth.

Bill Plovanic: Gross profit product I would assume. Just kind of curious what that does for the longer-term GM's. And thanks for taking my questions.

Ana Chadwick: Great, let me get started on that. As we commented, we have really strong gross margin once you back out the impact of the one-time impact of Goal. And the other point being the product life cycle. So by taking manufacturing time away from shifting lines and all of those things, we will anticipate that. But we're not providing long-term guidance here. So we'll come back and provide more color after we wrap up here in 2024.

Ana Chadwick: Let me get started on that. So, as we commented, we have really strong growth margin once you back out the impact, the one-time impact of, of go. We have stated before and continue to state Malaysia strategic for us. In after in the first 12 years, we will be accredive. So at the moment, we're ramping, so that will take time. So you can expect that that will be accredive right at around that one year mark and will continue to be in.

Speaker Change: Great, let me get started on that. So as we commented, we have really strong gross margin once you back out the impact, the one-time impact of

Jim Hollingshead: And is that where we should be thinking about as kind of a stepping off point for 2020 farmers or other things in 2025 like type two in that that could maybe take you above that low to mid teams US on the pod growth. Thank you. Jeff, I'll start with that. Thanks for the question. You are absolutely correct. There are absolutely a lot of puts and takes, especially in the fourth quarter. The important thing to recall here is that our overall guidance for the year continues to be strong. And I know you're referring here specific to the US with that high end of our guidance had that 2021 percent. So we raised the bottom at 18 up to the 21 percent.

Bill Plovanic: of Go.

Bill Plovanic: We have stated before and continue to state Malaysia is strategic for us.

Speaker Change: In the first 12 years, we will be accretive. So at the moment, we're ramping, so that will take time. So you can expect that that will be accretive right at around that one-year mark and will continue to be.

Ana Chadwick: And the other point being the product life cycle. So, by taking manufacturing time away from shifting lines and all of those things, we will anticipate that we're not providing long-term guidance here.

Speaker Change: And the other point being the product life cycle. So by taking manufacturing time away from shifting lines and all of those things, we will anticipate that. We're not providing long-term guidance here. So we'll come back and...

Jim Hollingshead: I do want to mention something as we think of 2025, which we are not providing guidance during the school. We'll wait until we wrap up the fourth quarter. We have a lot of things transpiring here as Jim mentioned in the second half of the year G7. We have iOS. We have Libre 2 plus. We have the international that is really ramping incredibly nicely and more countries ahead. And we have the type two label extensions. Once we have more clarity into the later part of the year, we'll come back and provide that additional guidance.

Ana Chadwick: So we'll come back and provide more caller after we wrap up here 2024.

Jim Hollingshead: I do want to take the opportunity to come back to some of the early questions on new customer starts and clarify just to make sure everybody is on the same page. So on new customer starts, we expect sequential growth, second quarter to third quarter, third quarter to fourth quarter, that to be true US international, of course, globally. And we already talked about all the reasons why that would happen.

Speaker Change: and provide more color after we wrap up here in 2024. I do want to take the opportunity to...

Ana Chadwick: I do want to take the opportunity to come back to some of the early questions on new customer starts and clarify things just to make sure everybody is on the same page. So on new customer starts, we expect sequential growth second quarter to third quarter third quarter to fourth quarter that to be true U.S. International, of course, and globally, and we already talked about all the reasons why that would happen. The question came up around year over year.

Bill Plovanic: to come back to some of the early questions on New Customer Starts and clarify just to make sure everybody is on the same page. So on New Customer Starts, we expect...

Bill Plovanic: sequential growth second quarter to third quarter third quarter to fourth quarter that to be true US international of course of course globally and we already talked about all the reasons why that would happen

Jim Hollingshead: The question came off around year over year. And I want to also reiterate not only globally because it's obvious that international is rocking so well. But to a lesser extent, but it's there. Our guide is contemplate year over year growth in US and CS. So I just wanted to make sure that that was clarified for us.

Ana Chadwick: And I want to also reiterate, not only globally, because it's obvious that international is rocking so well, but to a lesser extent, but it's there. Our guidance contemplates year over year growth in US NCS. So I just wanted to make sure that that was clarified for everyone.

Jim Hollingshead: And your next question comes from the line of Larry Bickleton with Wells Fargo. Your line is open. Good afternoon. Thanks for taking the question. Jim, one clarification on New Starts for me. Did you say overall US starts a new start to be up in Q3 and Q4? Yeah, so Larry, I know we're actually going to get a lot of clarifying questions on this. Let me see if I can characterize it clearly.

Bill Plovanic: The question came up around year-over-year, and I want to also reiterate, not only globally because it's obvious that international is rocking so well, but to a lesser extent, but it's there. Our guidance contemplates year-over-year growth in U.S. NCS. So I just wanted to make sure that that was clarified for everyone.

Jim Hollingshead: And ladies and gentlemen, this concludes our question and answer section. I would now like to turn the conference back to Mr. Jim Hollingshead for his closing remarks.

Jim Hollingshead: And ladies and gentlemen, this concludes our question-and-answer section.

Bill Plovanic: And ladies and gentlemen, this concludes our question and answer section. I would now like to turn the conference back to Mr. Jim Hollingshead for closing remarks.

Jim Hollingshead: I would now like to turn the conference back to Mr. Jim Hollingshead for closing remarks. Thank you, operator. In closing, we're very pleased with our Q2 and excited about our coming second half. Our Cascade of Innovation continues with our G7 tailwind, iOS, and Libre 2 coming to the U.S. and we're eagerly anticipating Tam expansion with FDA clearance for Omnipot 5 and Type 2. Our international business continues to outperform on the strength of Omnipot 5. All of that led us to raise our diet across the board.

Jim Hollingshead: I'll give it another try. So we expect sequential growth in the US. A new customer starts in Q3 and then again in Q4. And that's consistent with what we've said over the course of the last two quarters, where we expect the second half to be stronger and sequentially stronger. 2, 3, 4, Q2, 3, 4 over the course of the year. And the ramp characteristics remain the same. The big tailwind driver for us is G7.

Operator: Thank you, Operator. In closing, we're very pleased with our Q2 and excited about our coming second half. Our cascade of innovation continues with our G7 tailwind, iOS and Libre 2 coming to the U.S., and we're eagerly anticipating TAM expansion with FDA clearance for Omnipot 5 and Type 2. Our international business continues to outperform on the strength of OmniPOD 5. All of that led us to raise our guide across the board. And none of that would be possible without our amazing global Insulet team who get up every morning to change the lives of people living with diabetes. Thank you, Global Team. And thanks for joining us, everybody, today. We look forward to updating you next quarter.

Jim Hollingshead: Thank you operator and closing. We're very pleased with our Q2 and excited about our coming second half.

Bill Plovanic: Our Cascade of Innovation continues with our G7 tailwind, iOS and Libre II coming to the U.S. and we're eagerly anticipating Tam expansion with FDA clearance for Omni Bot5 and Type II. Our International Business continues to outperform on the strength of Omni Bot5.

Jim Hollingshead: And then we have other tailwinds coming. I think that one question that I'm sure people are asking themselves is what does that mean in terms of where we land? And there's two things that have changed in the core. One is, as I said, there's a smaller portion of the market overall is competitive switching, although we continue to win clearly in competitive switching. And the other thing is as we said in the prepared comments is our G7 launch is going very well through especially pharmacy channel.

Jim Hollingshead: And none of that would be possible without our amazing global Insulate team who get up every morning to change the lives of people living with diabetes. Thank you, global team. And thanks for joining us, everybody, today.

Bill Plovanic: All of that led us to raise our guy across the board, and none of that would be possible without our amazing global Insulet team who get up every morning to change the lives of people living with diabetes.

Operator: And ladies and gentlemen, this concludes today's conference, and we thank you for your participation. Have a wonderful day, and you may all disconnect.

Jim Hollingshead: We look forward to updating you next work.

Bill Plovanic: Thank you global team.

Bill Plovanic: And thanks for joining us everybody today, we look forward to updating you next quarter.

Operator: And ladies and gentlemen, this concludes today's conference, and we thank you for your participation. Have a wonderful day, and you may all disconnect.

Speaker Change: And ladies and gentlemen, this concludes today's conference and we thank you for your participation. Have a wonderful day and you may all disconnect.

Jim Hollingshead: And the ramp is good, demand is good, we're servicing it really well. But we made the decision because of that to not disrupt the customer experience and the channel experience to let inventory flow more naturally into that channel. And so both of those things create a little bit of a change in our outlook on total new customer starts in the second half. And so as Anna characterized in her comments, we expect the steep ramp, but the ramp in the second half is probably a little bit less steep than we had been expecting before.

Jim Hollingshead: Now where that lands in terms of total your new customer starts is hard to characterize each of those two dynamics or kind of hard to quantify, neither of them is that big, but combined what we're expecting is a less steep ramp in the second half, but still a really good ramp in the second half, the new customer starts, and the US. Okay, so Jim, thanks.

Bill Plovanic: [music]

Ana Chadwick: And so margins, that's what I wanted to ask about it. If I take out the one-time charge in the second quarter, your gross margin in the first half, I think was about 70%, the implied, even with, you know, keeping the one-time charge in, it's about 68 and a half percent. So why the lower, you know, lower than the, you know, lower gross margin in the second half versus the underlying first half?

Ana Chadwick: And how should we think about the benefit to your gross margin from the Malaysia? From Malaysia, you know, beyond 2024. Thanks. Yes, let me, let me jump into that. So in the first quarter, we had gross margin of 69 and a half, and now we have 67.7. So that gets us shy of the 69. And in the second half, we expect to be, as you can imagine, we're guiding to the full 69.

Ana Chadwick: So that's going to be higher than the 69 to make the overall. So that guidance, I just want to be clear, contemplates that 70, for the full year, contemplates that 70 basis points of pressure. We did not back that out from our guidance. We kept the up me pod, go charge that we took this quarter in our guidance. So hopefully that helps answer the question. Malaysia has a more limited impact. So as it's starting to produce product, and we expect to get more of that benefit as we move into 2025. And the first full year of running operations.

Margaret Kesar: And your next question comes from the line of Margaret Kesar with William Blair. Your line is open. Hey, good afternoon, folks. Thanks for taking the question. Yeah, I guess one on international, one of US and apologies for having both in here, but, you know, internationally, obviously, you're seeing a tremendous amount of traction. So can you give us some sense around how much of the beaten guidance range? There's a couple of quarters related to new patient ads.

Margaret Kesar: And these two countries, the two new countries, but that you better end, you know, are you seeing kind of this change and MDX starts just in general, where, you know, you can start to say, hey, this is a market trend. This isn't just, hey, we're taking competitive switches or more new patient ads, which I'm sure it's part of it. But just trying to get a sense of what's going on on the ground, and is it happening similar as we saw in the US a few years ago.

Margaret Kesar: And then just on the US side, and this is, you know, a clarification question that may be helpful may not, but, you know, the change in competitive converts to me historically, you know, 20% of new patient ads are competitive converts. Now you're saying it's 15%. So the Delta seems pretty minor 5% but correct me if I'm wrong on that. Thank you. Yeah, thanks, Margaret. I'll take both of those on the international.

Margaret Kesar: Yeah, we're so pleased with on E55 internationally. It clearly wins wherever we're able to take it. The UK launch continues to go extremely well. The Germany launch is going extremely well. And, you know, off of very strong performance in previous quarters, we, you know, both of those countries continue to perform ahead of expectation. We've just launched in France. It's very early. France is a really big market for us, but we know we have big demand and we're rolling that out.

Margaret Kesar: We have we have patients on product and ask beginning to ram. And then the other launch is, of course, the Netherlands. And when we launched the Netherlands, that was our first, when we entered that country, entered it with our sensor of choice offering, which is G6 and Libre 2. And we took that sensor of choice offering into the UK where we were already on market with G6. And that, that offering is going great.

Margaret Kesar: You know, so. So these are, these are largely MDI growth in a driven growth phenomena in all of those countries. As you know, internationally, most people who are on technology are locked into their contracts. And so. So it's largely MDI new to market customers. Many of them are already on a CGM because CGM pays road for us, but they're largely new to market pumpers. And we're really, really pleased with the performance and it makes us very bullish as we continue to roll out on Nepod 5 International.

Margaret Kesar: Emily. On the U.S, dynamic, yeah, I mean, we're trying to characterize it. It's a little bit odd. We know there's lots of questions about what's going on out there, but you're right. The, the mixtures is that kind of percentage mixtures. That's consistent with what we had last quarter, 85, 15. But as we look at the market, what we see is a trend now where just total base of competitive switching out there is smaller.

Margaret Kesar: It's a smaller part of the market. It's never been our focus in the business. It's not our focus now. Our focus is market growth. But that 85, 15 split is actually not that big a deal. We just want to characterize the dynamic. MDI, we were up in MDI and type one in the U.S., up in MDI and type two, and we very clearly lead in MDI, although we also win in competitive switching.

Margaret Kesar: That's a smaller part of our market or lower emphasis for us strategically. And your next question comes from the line of Travis Steed with Bank of America. Your line is open. Hey, I wanted to clarify a couple of things from the earlier questions. So Jim, did you say new starts can grow year over year in the second half of the year and also wanted to clarify. You were commenting on demand is good, but you made a decision to disrupt the customer experience and let M employees throw naturally so they create the.

Margaret Kesar: Don't need to be out looking at the second half. So I really wanted to understand what you. Sorry, Travis. No, it's. I hope I didn't say it that way. Well, I meant the exact opposite of what you just said, which is we don't want to disrupt the customer experience. So what's going on with the specialty pharmacy launches. You know, we've used we've used that kind of specialty pharmacy approach. A couple of times in the past, especially as we entered pharmacy, we've actually upgraded the way we do it.

Margaret Kesar: So with this launch. And with, you know, this is the first time that we've brought a kind of a new compatibility to the pot into the same channel under the same reimbursement code. And so figuring out how to feather that in and focus our built inventory on new customers has been what we've been designing to do. And we decided to take that into pharmacy into the specialty pharmacies. Because it allows us to focus on new starts rather than driving a lot of conversion in the base, which doesn't grow our customer base.

Margaret Kesar: So, so by taking it through specialty pharmacy, we're focusing on growing our new customer base, which is really important to the business and brings new customers into the market. And as we did that, it wasn't third to us as we planned it because it was the first time what the dynamic would be. The dynamics great. We're actually really well able to service very strong demand for G7 to specialty pharmacies. And saying that I should also point out those specialty pharmacies, the most of them were through multiple pharmacies there through a kind of a hub service that we've set up.

Margaret Kesar: And most of them are not visible to third party data. So, if people are out there trying to watch our new customer starts, they won't be able to see most of our G7 start through other reporting mechanisms, for example, like IQVS. So, so demand is really good. And it's flowing so well and we can flex it. And so that customer experience has been great. Therefore, we've decided not to force inventory into the retail channel, which would be potentially disruptive both for our channel partners and for customers.

Margaret Kesar: So, we're going to specialty pharmacy, it's going very well and we're going to let the inventory transition and retail at a more natural pace. So, that's why it's really because of the customer we want to we want to deliver the strongest possible customer experience and we're really happy without specialty pharmacies, and I think we expect during the second half to cross over into year over year growth. It's hard to call exactly when that happens.

Margaret Kesar: But the expectation is yes, we get into year over year growth in the second half. The decision to prioritize O5 over go. I'm interested. Is your expectation that the secure T2D label or that data will allow you to market to both the MDI and based on only population. That's one question. And then the second piece is pricing. Would you expect kind of patient agnostic pricing for this product? I think the third is I heard about the investments in the back half to set the stage for the type two launch next year.

Margaret Kesar: Any way to frame how much you expect to expand headcount through this process. Thank you so much. Thanks, Mike. Thanks for the question. The first thing is yeah, and I don't want to get too far in front of the FDA on the actual label, but the label we anticipate would allow us to market to both intensive insulin and basal insulin users. So that's that's the aim and security to the back that up because 20% of the participants in security to the word basal only users and they have fantastic results.

Margaret Kesar: And so the goal of omnipot 5 is to get out there and help people who are on insulin who need better control because of the fantastic smart adjust algorithm and its ability to, as you know, adjust both basal and adjust for real time. So that's the goal. And therefore, if we're able to achieve that labeling, we can help basal only patients with omnipot 5. And I know that you know the initial plan was to start people on omnipot go.

Margaret Kesar: And then as their insulin needs changed, get them on the omnipot 5. And the beauty of this strategy is that we don't have to wait to have people going on omnipot 5 contingent on FDA labeling, which we expect. And I don't want to get in front of it and all those caveats. And just we don't have to wait for omnipot 5. We just take it to market as omnipot 5 and meet the needs of a very wide wide range of patients.

Margaret Kesar: Then we were going to be able to meet. So we're excited about that. And I'm forgotten already the second part of your question. No, I just wanted to add maybe a comment there. When you think of the implications of that decision, it's not just a short term impact that we just talked about. There's a much longer term impact. Jim commented on the customer commercial, those things that there's also a operational impact in the company with less product life cycles, simpler in terms of our manufacturing capacity and operational and all those things that come along with that.

Margaret Kesar: So it's going to have its fruits much longer into the 2025. Yeah, we're really excited about being able to go on to the omnipot 5 platform as the flagship offer there. I remember you're at a second post Mike so quickly on pricing, we don't anticipate. I mean, omnipot 5 is already well covered, well reimbursed for people with type 2 diabetes. There's right now there's no distinction and we don't expect big commercial changes on that front.

Margaret Kesar: We'll see what happens, and the other side of that with the Salesforce. We've been successfully adding Salesforce heads now for some time. We added some earlier in the year. We'll continue to add Salesforce. We'll have more to say about the scale of that and the model for that as we get closer to actual launch. And your next question comes from the line of Matt Taylor with Jeffries. Your line is open. Hi, thank you for the question.

Margaret Kesar: Maybe I could just further get some color and help clarify a couple of key things we've been talking about in the call. One is I didn't want to ask you about you mentioned channel mixed benefits in this quarter. And I'm wondering if you could talk about the source of those. And I guess with the outlook for that in the US and as a company, as you have a lot of shifting sand in terms of the different channels and how the mix could have all.

Margaret Kesar: Sure, I'll start with that one. So when you think of the US and we are very heavily penetrated now in the pharmacy channel, what we have is, you know, we ship product and then we have, of course, the wholesalers and distributors and the PBNs. And at the end, it's the end customer. So how it moves into which specific distributors with what relationships and which PBNs with what coverage. That that all is hard to call.

Margaret Kesar: And now what we're talking about is not huge dollars. What I described in terms of the impact, but we should have some fluctuation in our pricing as we go through that process. So we will continue to refine our models and just continue to get better and better around that. But it's really a simple dynamic of being now so heavy into the pharmacy channel. And your next question comes from Chris Pasquale with nephron.

Margaret Kesar: Your line is open. Thanks. And one on international and one on the go decision. I know US, you know, by our math, your international install base share is well below where you are in the US. I'm curious though when we look at that overall international market, what percentage of those patients are in geographies where you have a presence today. In other words, how much of that pie are you really able to compete for?

Margaret Kesar: Yeah, thanks Chris. I'm internationally, you know, as you know, we're only in 24 markets, oh, US. And the larger markets are obviously, you know, the, you know, the usual suspects of large markets, UK, Germany, France, Nordics. And so we're, we're in the UK is only five five down in Germany with full releases and, you know, growing really, really well. France, we're just, we're just out of the gate with the omnipod five launch in France.

Margaret Kesar: And then as we said in the prepared remarks, Nordics is on the list for coming launches. And then, you know, and you can just by population, I think all all the meant that markets are fairly similar in terms of total opportunity. So we feel really good about where we are with omnipod five. It's clearly winning where we take it. And as we roll it out, we're very bullish on growth, which is what led us to another 600 basis point, increasing guide.

Margaret Kesar: And your next question comes from the line of Mike Kratke with learing partners. Your line is open. Hi everyone. Thanks for taking our questions. Maybe just a couple on the Type 2 launch. You know, first of all, is your plan to implement a full commercial launch in Type 2, once you get approval, or could that be a more sequence launch? And then maybe just a quick one on the Bayes of Lonely Population, but, you know, based on the updates today, can you provide some color on the level of demand that you offer, you know, pumps in the Bayes of Lonely Population?

Margaret Kesar: And does that change your outlook at all as you think about Omni-5-5? Thanks Mike. In terms of, you know, in terms of focal launch, I mean, what we've done is we've choreographed our plan for the launch in line with what we expect in terms of FDA approval. And so, we expect FDA approval by the end of the year. And once we have that, and with all the other pieces in place in terms of things like Salesforce training and so on, we'll be able to promote in line with that.

Margaret Kesar: But we also anticipate, and as I said, we'll get more details as we get closer to that. We anticipate also expanding our sales reach into non-specialty channels by adding some feed on the street. And that just gives us more share of voice into those markets. And so, we'll have more to say about that later, but we do anticipate being able to promote as we get clearance. The second side of your question around Basil.

Margaret Kesar: Thank you. With Basil, you know, in Omni-5-5-5-5 pilot, we were out there looking at how do patients present in the channel. And we saw a number of patient profiles. So, we went in with a draft patient profile that I won't try to detail. We added a patient profile to that. And what we found was that there are a lot of patients in the non-specialty channel. There's different patient profiles with type 2 diabetes that need insulin.

Margaret Kesar: And there's also a lot of type 1 patients in there. So, we're very confident that there's a lot of patients whose needs we can address with Omni-5-5. And if anything, I would say focusing on to Omni-5-5 makes us even more bullish about our ability to penetrate that market. So, we learned a lot as we were in those practices about what's happening in there and which kinds of patients are in there. And we're really excited about taking Omni-5-5 as the flagship product for the patient journey into those channels and to reach those patients.

Margaret Kesar: And your next question comes from the line of Jason Bedford with Raymond James. Your line is open. Good afternoon. I've got 15 clarifying questions. I'm just kidding. Just a quick couple of type 2s. Are you seeing any benefit from the type 2 data that you presented at ADA in late June? And then second, you see more confident in the timing of type 2 approval for Omni-5-5. Just to be clear, you're confident that reimbursement is in place.

Margaret Kesar: There's not going to be a lag in adoption because they're reimbursement. Thanks. Thanks, Jason. Thanks for the non-15 question list. So, in type 2, yes, we're very confident. I mean, type 2, Omni-5-5 right now is reimbursed through the pharmacy benefit. There's not a request for which type of diabetes. It's a script that's written from Omni-5-5 and it's very well covered on that basis. And that's why physicians are writing off label for it.

Margaret Kesar: We did see an increase in MBI, a start for type 2 patients in the quarter. We don't call out whether that's Omni-5-5, which has the full indication for use or Omni-5-5. We did see some lift in MBI for type 2. We are not promoting Omni-5-5 for type 2 diabetes because we do not yet have the indication for use expansion that will allow us to do that. And our reps, as I've said before, have one arm type behind their back for that.

Margaret Kesar: So, we're really bullish on that. But we have seen some lift and we think the coverage should be fine out of the way. There shouldn't be any delay in coverage for Omni-5-5. Andrew, your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open. Thanks for taking the question, and I'm so sorry I do have a clarifying one. What's this inventory tail, and you should be getting in the second half of the year.

Margaret Kesar: Love to know about that. And then my main question is really on the MDI side. If I look at the results for you guys for a couple of your competitors, it looks like the MDI penetration rates are starting to accelerate. Personal, is that true? Secondly, what's driving it? Is it new technologies? And just how durable is it between type ones and type two? It's just given how important it's going to be for you guys.

Margaret Kesar: Go forward as you grow your business. Thanks. Thanks, Matt. So I'll start with your comment on inventory tailwind. So as we talked about last quarter, we were anticipating a destocking of about 10 million, which we saw happen during the second quarter. And what we anticipate is during the second half of the year, that should come back. And the reason is all around the G67 transition and how we're managing the channels through that process.

Margaret Kesar: Thanks, Matt. On the MDI question, I won't try to cobble together any of our competitors results. I'll just say that I think it's reasonable to think that MDI penetration and type one is accelerating and work clearly leading that. So Omnipot 5 is very highly preferred with MDI patients. We continue to grow that space and we continue to win with MDI conversions. I think it's durable for both type one and type two.

Margaret Kesar: And the reason I believe that is because the burden of living with diabetes remains very high. And because our CDM partners have been outpaving road very effectively in front of us for some time. And so we've said before that we think penetration for AID in the type one space can go very high. That will above 70% on the back of the paid road from from CGM. And we're confident that we're going to be the leader that drives that kind of penetration.

Margaret Kesar: And we believe that, you know, now you see a lot of adoption in the type two space with CGMs on an ongoing basis. And so our two partners have an index camera out there paving road for us in type two and we see a big opportunity to take Omnipot 5 likely as the first to market AID system in that space. We see a big opportunity to drive the penetration of Omnipot 5 in type two as well.

Margaret Kesar: And your next question comes from the line of Steve Lickman with Oppenheimer. Your line is open. Thank you. Evening everyone. On the international strength you are seeing versus you're thinking heading into the year. Are you seeing better reimbursement and pricing in addition to faster new patient growth or is it all better volume? And can you remind us when you could have G7 connectivity internationally? Thanks. Thanks, Steve. Yeah. So what we've done, we've referred to this in the past.

Margaret Kesar: As we launched Omnipot 5, we work really hard to make sure that our reimbursement is commensurate with the additional value that Omnipot 5 creates for the healthcare system and for patients. And so we've been able to so far so good successfully negotiate a premium from Omnipot 5 where we've launched it. And so it is both volume and a bit of a price benefit. And the points are very, very good. Obviously, you know, with the starts are very, very strong for us with Omnipot 5 where we've taken it.

Margaret Kesar: And then again, I'm forgetting the second half at least. G7. G7, we have an enhanced timing. So we're obviously working on it. We obviously have a very effective working G7 integration which is creating a big tailwind for us in the U.S. We'll get it into European markets as soon as we can, but we have not yet enough. And your next question comes from the line of Joanne Wuensch with City Bank. Your line is open.

Margaret Kesar: Good evening. Thank you for taking the question and very nice quarter. Yesterday there was an announcement that I think took a lot of people by surprise the agreement between the Toronto and Abbott. I would love your opinion on how this changes or doesn't change the AID and really diabetes delivery landscape. Thanks. Thanks, Joanne. Yeah, we're very happy with our two CGM partners. We have a great relationship with Abbott. We have a great relationship with Dexcom.

Margaret Kesar: We're working really well with both of them. We're very excited to announce that we'll be bringing the Libre II plus integration to the U.S, market by the end of the year. And for us, we have a clear roadmap for Omnipot 5 platform expansion that includes sensor expansions. And it's full speed ahead. We are we remain very confident in our competitive position. Omnipot 5 is extremely differentiated from two pumps. And we'll continue to be. And so we're very bullish, full speed ahead with both of our partners.

Jim Hollingshead: And we have time for one last question that will be from Bill Plovenich with Canacorn Genuity. Your line is open. Hey, great. Thanks for taking my question and congrats on a good quarter. In terms of the gross margin, you know, from shifting over to Malaysia, how much gross margin longer term benefits should we see from that? And then how much do you pick up by eliminating go, which potentially was a probably a lower gross profit product I would assume. Just kind of curious what that does for the longer term GMs and thanks for taking my questions.

Ana Chadwick: Great. Let me get started on that. So as we comment that we have really strong gross margin once you back out the impact, the one time impact of of go.

Ana Chadwick: We have stated before and continue to state Malaysia strategic for us. In after in the first 12 years, we will be accredited. So at the moment we're ramping so that will take time. So you can expect that that will be a creative right at around that one year mark and will continue to be in. And the other point being the product life cycle. So by taking manufacturing time away from shifting lines and all of those things, we will anticipate that we're not providing long term guidance here.

Ana Chadwick: So we'll come back and and provide more caller after we wrap up here 2024. I do want to take the opportunity to come back to some of the early questions on on new customer starts. And and clarify just to make sure everybody is on the same page. So on new customer starts, we expect sequential growth, second quarter to third quarter, third quarter to fourth quarter. That to be true US international of course globally.

Ana Chadwick: And we already talked about all the reasons why that would happen. The question came off around year over year. And I want to also reiterate not only globally because it's obvious that international is rocking so well, but to a lesser extent, but it's there. Our guide is contemplates year over year growth in US and CS. So I just wanted to make sure that that was clarified for us.

Jim Hollingshead: And ladies and gentlemen, this concludes our question and answer section. I would now like to turn the conference back to Mr. Jim Hollingshead for closing remarks. Thank you, operator. In closing, we're very pleased with our Q2 and excited about our coming second half. Our Cascade of Innovation continues with our G7 tailwind, iOS and Libre 2 coming to the U.S, and we're eagerly anticipating Tam expansion with FDA clearance for Omnipot 5 and Type 2.

Jim Hollingshead: Our international business continues to outperform on the strength of Omnipot 5. All of that led us to raise our diet across the board. And none of that would be possible without our amazing global insulate team who get up every morning to change the lives of people living with diabetes. Thank you, global team. And thanks for joining us everybody today. We look forward to updating you next work.

Operator: And ladies and gentlemen, this concludes today's conference and we thank you for your participation. Have a wonderful day and you may all disconnect.

Q2 2024 Insulet Corp Earnings Call

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