Q2 2025 Insulet Corp Earnings Call
Good morning, ladies and gentlemen, and welcome to the insulate corporation's, second quarter earnings call at this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone. Telephone as a reminder, this conference call is being recorded. I would now like to turn the conference over to your host June Lazer off, senior director, investor relations.
Good morning and thank you for joining Intel's. Second quarter, 2025 earnings call.
With me today are Ashley McAvoy press president and chief executive officer and Ana Maria, Chadwick Chief Financial Officer.
Also, joining us for the Q&A portion of today's call is, Eric Benjamin Chief Products and customer experience officer.
Before we begin, we remind you that certain statements made by insulate 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 FCC filings for a detailed explanation of the inherent limitations of such statements.
we will also discuss non-gaap Financial measures with respect to our performance, including adjusted operating income adjusted, Evita adjusted tax rate and constant currency Revenue, which is revenue growth, excluding the effect of foreign exchange
These measures aligned with what management uses as supplemental measures and 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 constant currency basis.
With that, I will turn the call over to Ashley.
Thanks, June, and good morning, everyone. As of yesterday, I have 100 days under my belt. I visited our top 4 markets and all 3 shifts in our active manufacturing operation. I met with physicians in the field and at the ADA. I've listened to our team partners, healthcare providers, investors, analysts, and most importantly, our loyal Potters.
The Welcome by team insulate and the diabetes Community has been warm and gratifying. And I'm eager to share insights and prayers with you this quarter.
First and foremost, our results, this quarter reflect our attractive position, as a differentiated durable Growth Company in a large underpenetrated Market. We grew 31% surpassing the 600 million dollar Mark for the first time with 649 million of Revenue and continue to be highly profitable and cash flow positive.
We achieved this by getting a record. Number of people on pod. We drove both year-over-year and sequential growth in new customer starts across all of our strategic growth areas. Us, type 1, US type 2 and International.
This reflects omnipod 5's unique consumer, appeal and strong clinical outcomes as well as solid prescriber growth and Commercial execution. We delivered this growth while generating strong adjusted operating margin expansion for the quarter.
Based on these robust results, we are raising fully your guidance for Revenue growth and adjusted operating margin. Which honor will walk you through for now. Let me turn to some observations from my first 100 days.
Has been channeled into the product and into the community.
Everyone here, cares deeply about revolutionizing diabetes management and that intense Focus has earned insulin, a unique and advantaged position at the Nexus of consumer. Health Medtech and health Tech.
Going back to insulin's Origins as a groundbreaking insulin management system for children. The company has innovated to improve clinical outcomes and transform patients lives.
Omnipod created the market for modern insulin delivery, and is built an entirely new category.
Patients. See us as a pod, not a pump, we continue to lead the market. With truly differentiated technology. Omnipotent is an engineering Marvel, a complex medical device, that is simple to use and delivers great outcomes.
For patients. It's an insulin delivery experience in a class by itself.
Omnipotent advantages. Shine through in clinical evidence, we have a large and growing body of randomized, Trials, and real world evidence underscoring, our strong clinical outcomes across type 1 and type 2 diabetes.
At the Ada in June, we highlighted omnipod 5's, robust results from secure. TD are pivotal trial. In type 2 diabetes, including a 0.8% reduction in A1C and a 20% Improvement in time and range.
Additionally it showed that omnipod 5 patients used 29% less insulin and experienced. Minimal weight gain and lower hypoglycemia versus other therapies. All key clinical considerations for Physicians evaluating type 2, diabetes treatments.
Results. Like these are a key factor, driving adoption and the tremendous growth in our prescriber Base today more than 25,000 Healthcare Providers. Are prescribing omnipod 5 in the United States? This is up approximately 20% from last year and continues to grow.
My conversations with potters and Physicians have also reinforced that customer experience and clinical outcomes. Go hand in hand.
The unique Simplicity of omnipod 5 brings people to our platform who saw themselves as too old for advanced technology or who felt ashamed to be using a medical device.
Jack, a 91-year-old veteran in Baltimore, discovered that a pod is easier than injections and now lives with less hypoglycemia.
Samantha, a teenager from Tampa has started to go to sleepovers and wear dresses again, thanks to the discretion of omnipod and the ability to control it with her phone.
We celebrate this broad impact and continue to invest in making omnipod even better.
Orchestrating a superior. End-to-end experience for Potter's has required us to devise and invest in thoughtful Solutions across our business.
Over the past decade, we've invested more than 1 billion manufacturing capabilities.
We have pioneered advanced automation in our plants and built a robust and secure global supply chain to deliver tens of millions of complex electromechanical devices per year at medical standards.
Insulates proprietary tooling equipment and processes, enables a sustainable cost advantage.
Similarly, for patient access 8 years ago, insulin began building critical payroll relationships, and negotiating Pharmacy Channel distribution in the US to make Omni pod available where patients pick up their insulin.
Today, our near 100 percentile and unique, Medicare party coverage, make omnipod easy to find and easy to afford. You can get an omnipotent more than 47,000 pharmacies in the United States often for just a dollar per day. Importantly, we earn our customers business. Essentially, every 3 days with our pay, as you go model,
Our infrastructure is different than that of traditional pumps because omnipod is different.
Together these advantages have given rise to a community. Unlike any other, I've seen during my 30 years in healthcare, omnipod has grown into a beloved Grassroots brand fueled by Potter's word of mouth and advocacy.
In the U.S., Omnipod is the most prescribed and most requested aid system. It is also number one in new customer starts in the U.S. and the EU.
Our more than 500,000 Potters are passionate and engaged R&D partners with a deep interest in continuously. Enhancing our products for the benefit of everyone with diabetes.
Space. We have a tremendous potential to broaden. Our reach become an iconic. World-class brand and grow faster with targeted and compelling marketing, strategies to reach distinct, segments, of type, 1 and type 2 patients.
In some um, even more confident that I was 100 days ago, in insulin's unique, strengths, and exciting future. We have a strong brand engaged. Customers differentiated technology backed by clinical outcomes and a durable recurring Revenue, business model, all operating in a large unpen Market.
We've best-in-class technology manufacturing and patient access that we have used to create a category of 1.
And we have a rich data ecosystem. That is driving a virtuous cycle of smarter products, and better outcomes.
There is tremendous opportunity ahead.
Last quarter, I emphasize that our strategic objectives are intact that is still the case. As you can see from the results this quarter, we are executing well against these objectives, we continue to expand our lead in US type 1 driven, primarily by new prescribers and new patients.
The seamless expansion of our Us sales team has been and will continue to be a key priority as we first strengthen and scale our commercial operations, our progress on this front has accelerated, our momentum in the marketplace and contributed to our strong new customer starts.
We are driving adoption as they first mover in US. Type 2. We are in the early stages of creating the market learning rapidly and honing our approach.
Type 2. New customer. Starts accelerated in the quarter.
I'm encouraged by the strong conversion from MDI and the positive response from early adopter customers. Satisfaction is high, and we are seeing remarkable outcomes in endos with type 2 patients, who have been reluctant to give themselves an insulin shot, are seeing results with Omnipod 5 that mirror our secure T2D outcomes. There is meaningful improvement in A1C and improved glycemic control.
We are growing durably and profitably outside the United States. Our international business posted nearly 40% year-over-year growth and accounts for approximately 30% of our revenues.
Our Revenue base is concentrated in the UK. France and Germany, where we still have room for further penetration.
Omnipod 5 launches in these markets have gained strong adoption and driven positive price. Mix realization. We have an immense opportunity to continue growing at attractive margins.
And finally, we are investing in platform Innovation as we maintain and expand our technology Advantage. This includes our next Generation hybrid closed loop algorithm in the strive pivotal study and a fully closed loop algorithm designed specifically for type 2 diabetes and are Evolution 2 and simple, use feasibility studies.
We are also advancing our integration with the latest sensors, G6, G7 and Libre 2 plus have launched and Libre 3 plus is coming in 2026.
In June, we were excited to fully launch our IOS app compatible with G7.
This integration represents a major milestone in our commitment to providing our customers more choices with less devices.
Getting Potters to use their phone versus controllers. Typically yield benefits to engagement retention and outcomes.
Well, we have seen rapid adoption of our iOS and Android apps. We still have approximately 55% of eligible U.S. Potters still predominantly using their controller.
We have considerable upside as app use growth and we expand our Integrations.
Looking ahead. My focus now is determining how we build on our strengths and further scale this incredible business for even greater Global impact.
We are seeking to move faster.
Deepen. Our advantages.
Drive. Penetration raise margins. And open new opportunities.
I'm still learning but already see 4 areas will be working on.
First enhancing commercial capabilities.
We have earned a place as market leader, and can now sell our clinical outcomes and experience advantages as well as our unique form factor.
To Consumer capabilities to accelerate demand, generation and Market development.
This is a key opportunity across all of our markets.
Third driving global scale, both operationally and financially, as Market leaders and Market Shapers, we can strengthen our local market presence outside the US to grow faster and expand our margins.
We'll invest in market development capabilities, commercial excellence, and top talent to accelerate market penetration.
Finally, we'll accelerate the pace of innovation. We will ensure we are early on Next Generation, sensor Integrations, invest in technology to modernize the customer experience and improve retention and patient outcomes.
We're also pushing our limits and thinking expansively about our strategic Ambitions and long-standing focus on solving unmet, patient and clinical needs.
We look forward to sharing more at our upcoming investor day on November 20th in active Massachusetts.
Before I close, I would like to thank the insulate team for their hard work and commitment this quarter. This Record performance would not be possible without your efforts.
I count myself fortunate to have joined this team and this business with our highly differentiated technology platform. We have a unique opportunity to improve lives for millions of people with diabetes.
To scale profitably in a large and underpenetrated market. And to drive long-term value Creation with that. Let me turn the call over to Anna to discuss second quarter results and guidance in more detail.
Thank you, Ashley, and good morning everyone. We delivered another excellent quarter. Growing new customer starts on a year-over-year and sequential basis in the US for both type 1 and type 2. And in international,
Consistent with prior quarters over 85% of our us. New customer starts came from MDI and over 30% were type 2. In addition, we had the highest quarter of competitive switches since late 2023.
Revenue for the total company was 649 million and grew 31% over prior year. On a reported basis, foreign currency had a favorable impact of 160 basis points.
Our estimated global utilization and annualized global retention rate remain stable.
Our team executed across the business. Delivered exceptional Topline results. While also expanding adjusted operating margin and increasing profit. We are proud of this accomplishments and our raising full year Revenue guidance, making 2025 are 10th consecutive year of 20%, or more growth on a constant currency basis.
We are also raising our adjusted operating margin, reflective of the operating leverage we are achieving across the business. I will walk through guidance in a few moments.
Turning to our second quarter revenue results.
Us Revenue, grew 28.7% above the high end of our guidance range on a strong performance from our commercial team as we continue to see great demand and momentum for omnipod 5, which is driving growth in our customer base.
Us omnipotent Revenue growth benefited by approximately 350 basis, points from a prior year, stocking Dynamic, and an approximate 150, basis points, Tailwind related to the timing of rebate.
As we come into the last quarter, this rebate Dynamic was a headwind in the first quarter and expect to be neutral on a full year basis.
Turning to International. We had another quarter of exceptional execution, achieving Revenue, growth of 38.8% above the high end of our guidance.
On a reported basis for our currency was favorable 620 basis points over the prior year.
In international growth, the demand for Omnipod 5 and customer base growth primarily drove continued demand. As expected, positive price realization also contributed to growth as customers shift from Omnipod to Omnipod 5.
We are seeing strong growth in the UK, Germany and France. In addition to the other countries where we have launched omnipotent
5. We are also continuing to work with local Health, authorities to expand access and broaden our sensor integration roadmap to drive adoption.
gross margin was 69.7% gross margin included, approximately 10 million of inventory related charges, including the write-off of Legacy components as we support the strong demand, and migration to omnipotent 5, our latest technology
we're pleased to have delivered 70.7% gross margins on a year-to-date basis and we are on track to achieve our full year guidance of approximately 71%
Operating expenses increased as we continue to invest in our pipeline of innovation and sales and marketing efforts. Specially as we developed the type 2 markets,
Adjusted operating margin was 17.8% and adjust. The ibida margin was 24.3% in the second quarter. Our team is executing well, across our growth objectives and reinvestment plans, which have to gather generated meaningful operating Leverage
our second quarter non-gaap adjusted tax rate was 22.1%.
Turning to cash and liquidity. We ended the quarter with 1.1 billion in cash. And the full 500 million available under our credit facility. We continue to strengthen our balance sheet, improve our financial flexibility, and lower our cost of capital to date. We have extinguished 420 million of our convertible notes. Due in 2026,
And we have initiated the Redemption of the remaining 380 million which will close later this month.
During the quarter. We repurchased 93,000 shares for approximately 30 million under our 125 million dollar, authorization and also refinance our Term Loan B. Reducing the rate by 50 basis points, which lowers our interest expense by approximately 122 million over the remaining term of the loan.
Now turning to guidance we are pleased to provide our outlook for the third quarter. As a reminder, our Revenue growth guidance is on a constant currency basis.
For the third quarter, we expect total omnipotent Revenue growth of 24 to 27%.
And total company growth of 22% to 25% on a reported basis. We are assuming a favorable impact of 100 basis points from foreign currency.
For us, Omnipod, we expect third-quarter growth of 21% to 24%.
For international omnipotent. We expect third quarter growth of 33 to 36% on our reported basis. We are assuming a favorable impact of 300 basis, points from F currency.
Now, turning to a full year 2025 outlook.
For the full year, we are raising our total omnipotent revenue growth guidance to a range of 25% to 28%.
We are also raising our total company Revenue. Growth guidance to a range of 24 to 27%. On our reported basis, we are assuming favorable impact of 100 basis points from foreign currency for the year.
For us omnipotent, we're racing our Revenue, guidance range to 22 to 25% driven by customer base growth. We could continue to win and lead in type 1 and gain momentum in type 2. We expect current demand Trends supported by consistent rate of patient conversions from MDI to support our strong growth.
We expect year-over-year growth in us. New customer starts in 2025.
As a reminder, our us growth guidance for 2025 reflects. Similar Trends in pricing utilization and retention, as we saw in 2024,
For international. Omnipod we are raising our Revenue guidance to 34 to 37% on our reported basis, we are assuming a favorable impact of 300 basis. Points from current currency.
we expect to drive strong growth in the UK, Germany, and France, while also ramping adoption in our newer International markets,
All supported by benefits from new sensor Integrations and customer upgrades from omnipotent to omnipotent 5.
We expect year-over-year growth in international new. Customers starts in 2025.
Realization.
We're also assuming stable utilization Trends. And as previously, communicated retention Trends, improving slightly for 2025 relative to 2024.
Turning to 2025, gross margin for the full year. We are reaffirming our gross margin guidance of approximately 71% which reflects 120 basis points of expansion over prior year and Remains the highest in the diabetes, technology space.
Our full year, gross margin guidance. Now assumes an impact of approximately 20 basis points from tariffs, which is lower than our prior. Assumption of 50 basis points, given the recent updates and changes in US tariffs.
Our strong manufacturing position and efficiencies from scale, mitigate, and absorb this impact.
For the year based on our strong performance today and continued operational leverage across the business. We are racing our adjusted operating margin guidance to a range of 17 to 17 and 1.5%.
Our guidance includes plans to continue investing in R&D Market development and demand generation.
As we have communicated, previously, we remain committed to driving at least 100 basis points of adjusted operating margin expansion, annually. As demonstrated, by our updated guidance, we will deliver well Above This level in 2025.
Looking at a few items below our operating income.
Consistent with what we have communicated last quarter. We expect our 2025 net interest expense to be approximately 30 million higher than 2024 largely due to the elimination of our convertible debt, which was at a higher cost of capital and the replacement of our interest rate swaps which expired this quarter.
For the year, we still expect our non-gaap tax rate to be in the range of 20 to 25%.
As communicated last quarter, we expect the 2025 ending balance of our diluted share count to be around 71 million which is approximately 5% or 3.5 million shares, lower than prior year due to the extinguishment of our convertible debt.
From a cache perspective on an annual basis compared to Prior year. We expect free cash flow to be higher despite higher Capital expenditures. As we are now evaluating the acceleration of our manufacturing expansion plans, due to the increase in global customer adoption.
We remain excited and confident in our objectives to drive growth, expand margins and increase profitability and free cash flow, all contributing to long-term value creation.
Before moving to Q&A, I want to take a moment to share a leadership update. Later this month, Claire trackman will join insulate as our new vice president of investor relations reporting to me. Claire joins us from Baxter where she served as vice president of investor relations for the past decade. She brings significant Medtech. Investor relations experience and her Edition. Reflects the continued strengthening of our leadership team under Ashley's direction, as we look to the Future.
We are incredibly grateful to June last year. For her thoughtful interim, leadership of the IR function and for her continued support to enable a seamless. Transition June will remain with us through the end of August,
With that operator, please open the line for questions.
Thank you. If you have a question at this time, please press star, then 1 key on your touchtone, telephone. If your question has been answered, or you wish to remove yourself from the queue, please press star 1. Again, in the interest of time, we ask that you limit yourself to 1 question. You may rejoin the queue. If you have additional questions as a reminder, the speakers available for Q&A. Today are Ashley McAvoy on a Chadwick. And Eric Benjamin.
Our first question comes from the line of Robbie Marcos from JP Morgan. Your line is open.
Hi, this is Lily on for Robbie. Thanks so much for taking the question. Um, both the U.S. and international came in nicely ahead. So, can you talk about some of the drivers of the upside, both in the U.S. and internationally, and the trends that you're seeing in those different geographies across new patient groups?
As you mentioned, we're driving very strong adoption as the first mover and type 2. Uh our International growth is accelerating and we are continuing to invest in platform Innovation and clinical outcomes. Uh, I mean, you can see from we are we we command the largest, um, customer base their, our new customer starts our, um, off to acceleration both year-over-year and sequentially. And I think in the US, we're really seeing very strong adoption of the omnipod 5, uh, based upon very, very strong clinical outcomes um, that we've been sharing at the Ada and we continue to integrate those with the latest sensors as mentioned, with the G7 and and iOS compatibility. Uh and I would say type 2 in the US very strong momentum based upon really bringing the science and the evidence to the clinicians. As you know we have a very strong history here and Equity over built over 25 years with the Endo community.
In type 1 and we're leveraging that as we start to penetrate the type 2 community and oh us uh, you know, as we mentioned in our remarks, we have a very strong concentration in 3, key markets, UK, France, and Germany, which comprise the majority of our business. Oh, uh, and all of those are really benefiting from the launches of omnipod 5. And then, as we've mentioned on prior calls, we've also expanded Omni 55. Now, to inclusive of total of 4
Markets. And all of those are driving. Strong adoption. Thank you for the question Lily.
Your next question comes from a line of Travis Steed from Bank of America. Your line is open,
Hey, congrats on the quarter and, uh, congrats on on hiring Claire, uh, uh, she's a, a well-loved IR person, so so good to get. Um, and I, I wanted to ask on, on type 2, uh, and the new start, uh, for the accelerator this quarter, what do you think kind of drove that acceleration can acceleration kind of continue in the back half of the year and uh just just kind of get an update on on kind of the overall type 2 opportunity here.
Thank you Travis. Uh, well listen I mean type 2, as we know, is like a, a massive opportunity with a large tan and it's great to have a first mover advantage. And as I mentioned, we're really parlaying and coming from a position of strength of 25 years, really? Getting Aid therapy, uh, endos and high. Prescribing pcps comfortable with that. You know, when we look at type 2, the framework that we're we're abiding by is is number 1, really sharing our strong clinical evidence. We share this again with the Ada and secure TD. We do, in fact, lower A1C, and we improve time and range second is really, we have very strong Market access and ease of use. Uh our I like to say not all Pharmacy, access is created equal but we have you know access to 47,000 pharmacists, Travis where we have, um, also coverage over 300 million lives are covered with Omni
And a preferred position with very low co-pays. In fact, on average, it's around a dollar a day for our patients and um, and that really has enabled very strong access as well as affordability. Uh, we've been working on our field. You know, you mentioned that we've been expanding our fuel Force, getting them really comfortable to not just sell in our unique form factor but to also to sell in the science,
Uh, and also we are sourcing not just patients from um MDI but as Anna mentioned in her results, we actually did experience a quarter of the highest in 8 quarters, where we Source, some of that volume from competitive users. Um, so I just think that we just got to continue to get the word out that, uh, we have a highly differentiated technology with really strong outcomes.
Your next question comes from the line of Jeff Johnson from beard. Your line is open.
Thank you guys, good morning. Uh congrats on the strong quarter uh Ashley you know as we're all trying to get to know you a little bit better here I I think 1 of my questions just such a strong raise uh in 2 Q here and 2 Q can be a tricky quarter because you know I think a lot of companies would like to leave a little bit of room for 3 q and 4 q as well. So just your overall framework and how you think about Guidance? Do you, do you like to set guidance at, you know, realistic numbers? Are they numbers that you feel? Maybe a little aggressive, a little conservative, just kind of your framework for how you think about, uh, guidance uh, especially after today's strong race? Thanks.
The beat we had here in the second quarter and this reflects that you know, we're seeing the momentum and we're leaning in and uh we'll keep you all updated.
Your next question comes from the line of Larry biegelsen from Wells, Fargo. Your line is open.
Hi morning. This is simran on for Larry. Um, thanks for taking the questions here and congrats on this a really strong quarter, um, maybe just to focus on the US business. If I, you know, take all the pieces of the guidance, it implies about 14 to 22% growth in Q4. Um, if I'm doing my math, right? Which is a pretty wide range. So can you talk about what gets you to the high end versus like the low end of the range? And how should we think about that in the context of 2026? Um, you know is is 20%
Growth still a good way to think about the US business going forward.
Uh, thank you for joining. I'll turn it to Anna, can't make some remarks, um, great, you know, our underlying business, Trends are very stable, uh, let me unpack some key Dynamics. Um, specific in the US, we have talked about stalking and rebate. Dynamics, when you take those into account our first half normalized growth rate is 24%, and in the context of of that, our back half guidance is very strong. Um, we do not anticipate anything
Changing here. Um, just the momentum continuing and we expect to have uh positive update for all of you guys as we get into our third quarter earnings call.
your next question comes from a line of Joanne winch from City Bank, your line is open
Uh good morning um nice quarter. And thank you for taking the question, um internationally. Um it sounds like it's going quite well for you with the Target on 4 countries. How do you think about expanding those? Um, or expanding the footprint as you? Um, push further outside the United States, thank you so much.
Thank you, Joan for the question. Yeah. I mean, our, our international business had a very strong quarter and uh, really our kind of 3 key drivers of profitable growth. Uh outside the United States, are 1 continuing our existing markets, like the UK, France, and Germany, where we, I would say we have strong holds and there's lots of opportunities to really increase penetration in those stronghold markets. Um, in those markets, we with the launch of omnipod 5, in the conversion from Dash to 555. We are commanding a positive price, mix realization.
Uh and then I would say we're being very thoughtful around what are the other markets to expand to so that we can ensure that we're meeting people with diabetes but in a very financially disciplined fashion uh some of the markets that we've launched Omni 55 like Canada, Australia is the Netherlands, they're all going very well. Uh, We've queued up some additional markets that we plan to share with you on November 2 0.
20th at investor day but we really are having a balanced strategy. I would say ongoing deep and valuing depth um you know, as we assess where What markets that we go broad on.
You. Our next question comes from the line of Shaun Singh. From RBC, your line is open,
Oh great, thank you so much. Um, I was hoping you could, uh, shed some light on second half, guidance. I think it assumes about 21%. Uh uh, selling the adjusted growth versus 30% of the first half, so, you know, can you maybe just elaborate on some of the assumptions behind the, 2025 guidance guidance? What drives the step down in Q2? Is it conservatism or are there other factors to consider and you did call out, uh, for us? Omnipod Revenue in Q2, you called out some stocking Dynamic and um, some Tailwind around rebate. So if you can just help us with some of the puts and takes to come up with the underlying growth that would be helpful. Thank you.
Sure, sure sure this is Anna. Um, as I mentioned, you know, on our underlying bases, our business is very, very stable here and, uh, unpacking some of the Dynamics. You just called stalking as 1. Uh, absolutely. And then also the rebate Dynamic. So when you put all of those together, our first half us normalized, growth rate is at 24% and in that context, you know, the guidance here is very strong uh, that we're uh and we're lifting by quite a bit. As as I mentioned just now um we are ready.
Placing our guidance by 3 times, the beat that we had here in the second quarter. So we're leaning in because we're seeing this momentum, uh, sticking and, and being strong for us and we look forward to giving you a positive update. Um, as we go into our third quarter earnings, so um, everything is trending and uh growth is strong.
Insects your line is open.
Uh, thank you. Good morning. I just want to Echo Travis's comments on on Claire joining the company and the opportunity to work with her directly and think she'll be a great addition to the team. And just want to also thank June for all of her support as we've gotten up to speed here uh on the company. Uh, may may I just ask on a comment that you made kind of toward the, the latter part of the call around increasing capex is support higher demand. Can you maybe go into a little bit more detail there on how demand has shaped up relative to expectations? And if that acceleration in capex is a reflection of a view of demand, tracking ahead of a original expectation, that a view that that can continue here, and how we should kind of put those pieces together.
Yeah, thank you for the question, David. Uh, I would first start with again. We have a history here, of investing ahead of the curve of making sure that we have, the appropriate amount of capacity, to say yes, to all of the demand. And very pleased with how the team has been executing, really the past year of adding, new lines, into acting, which are fully up and producing high quality pods, as well as extending our presence in Malaysia and getting that that plant where coming up on our year anniversary um to really meet the global demands and we've been a Pioneer in advanced Automation and Manufacturing capabilities and we'll continue to do that. So what Anna was referencing is you're going to see us continue to invest in our supply chain buildout to make sure that
That we stay ahead of the curve of meeting Global demand.
Your next question comes from a line of Michael polar from Wolfe research. Your line is open.
Good morning. Um, I'm interested in a comment on uh the recent Medicare um proposal around the competitive bidding and shifting payment uh, in the DME channel to pay over time. Look, I I understand you're not directly exposed to your, you have chosen a different business model, um, and so kind of nothing uh, to say on that but but if this moves forward, the industry stands to change quite a bit. And I'm interested. What pops thinking about as to how
To um to stay ahead of those potential shifts, as you digest, What's um a very complex uh suggestion rule from from the government. Thank you.
Thank you for the question, Mike. And, and listen, we've, we've been reviewing the CMS proposal. We, we clearly support the increased access to the latest technology for diabetes management, you know, as you know, we are um, available to patients on an as you go basis, a pay as you go and it's sold uh with near 100% of our distribution through the pharmacy Channel, as I mentioned, 47,000 Pharmacy. Uh, so we we clearly think that, uh, insulin Delivery Systems that are a part of Medicare Part, D are not eligible for competitive bidding under the part B. Uh and we are going to continue to gauge and and CMS to really talk about the benefits of our differentiated.
Omnifi 5 technology and how we improve care for people with diabetes.
You. Our next question comes from the line of Richard newer from truist Securities. Your line is open.
Hi, thanks. Uh, so much for taking the questions and congrats on the quarter, uh, wondering. If you could just comment a little bit on, um, the how the t2 indication um, is potentially, allowing you to better compete for type 2 patients, uh versus the competition in how much of you know the the momentum you're seeing there from last quarter or the last few quarters is that indication versus, you know, converting to marketing uh, initiatives direct to uh, patients.
I'm going to turn it into Eric.
Richard, this is Eric. Maybe just some color on type 2, the indication and competition. You know, first, the indication is really helping us build the market as first movers in type 2. And, you know, we have the SECURITY T2D study, which shows an average A1C reduction of 0.881 and significant A1C reduction up to 2% for those with A1C over 9. That kind of clinical impact really resonates with prescribers who are looking for solutions for those who live with type 2 diabetes. So, what our team is doing is bringing the power of that evidence to folks with whom we have strong relationships, and we're activating more prescribers.
Comfortable prescribing aiv as it relates you know to competition. Omnipod is just so differentiated and so simple to use that it gives us some strength uh in addition to that body of evidence um that you know help us compete in the market. In addition to the strengths of Technology, we're also unique from an access perspective,
Co-pays typically about a dollar a day right? Where they get their insulin and um we continue to work on how we simplify that customer journey to help those who wouldn't otherwise have access to technology. Get the benefits of omnipods.
Your next question comes from the line of Izzy Kirby from Redbarn Atlantic. Your line is open.
Hi guys, thanks so much for taking my question on type 2. I'm sorry if I missed this. But did you break out? The proportion of new starts in the US coming from type 2. I think that's usually something we've had from you guys and then just following on On type 2.
How should we think about? Who is prescribing? Type 2 scripts, early doors? Is it leaning more Primary Care? Still very much in the end space and then, what are you seeing in terms of direct to Consumer leads as well? Thank you.
Thank you, Izzy, for the question. Let me kind of first start with our the strength and our us type 1. In the United States, we had very strong improvement in our total customer base and our total prescriber base, as well as our new customer starts. And that has enabled us to maintain the position of being the number 1, most prescribed, the number 1 most requested Aid, and number 1, in new customer starts in the United States for type 1, and that really is our Core Business. We are parlaying a lot of that leverage to high, prescribing endos first,
And really ensuring that they're following the science, uh, as endorsed by the Ada, on standards of care using Aid therapy as first line of therapy. And we're I like to say taking the science to the street of making sure we um get that that cohort really comfortable as they are equally comfortable with the type 1 community and then we're working with them to help influence and get the confidence and high. Prescribing pcps in the marketplace. So we're actively invested in our science and scaling up our sales force to get comfortable with the science to really follow the the guidelines. And as we shared the new customer starts coming from type 2 in the United States are approximately about a third of our new customer starts in in the United States.
Your next question comes from a line of Matt Taylor from Jeffrey's. Your line is open.
Uh, good morning, thank. Thank you for taking the question.
I had a related question on your your last comment there, you talked about earlier on this call about 25,000 subscribers. I think and it sounds like the sales force expansion. Has been relatively seamless. I I was just thinking that's kind of I think calls out 100,000 prescribers in in the US. Do you think that will continue to see that kind of growth towards the Dexcom number over time? Or are you viewing your growth in the future coming more from quote, unquote? Same store growth.
Uh, thank you for the question about and I welcome you to come, you know, when you hear a whole story and investor day and act in on on November 20th. But we I mean, we're seeing really strong growth on our core where we also have very low penetration still uh and a lot of room to go in the United States and then I would say that we are have a new indication, it's really a green field and the type 2 Community. The the continuous glucose monitor sensors have are out there. First driving broad adoption, uh, in the insulin using and non insulin using patients, but we have a lot of opportunity to drive continual growth. It's it's not going to be a linear line per se. I would say on type 2 because this is a new market that we're creating and we're learning and we're honing our approach, but we're very pleased with we're coming up on nearly 1 year uh of really talking this with the the clinicians and uh and patient community. So stay tuned for more as we talk about it on November 20th.
Your next question comes from the line of Bill planicie from canaccord genuity. Your line is open.
Uh great thanks for taking my question. Um you know I actually I think when you first started there was some fear about operating margin expansion and maybe some of the reimburse reinvestments you had talked about and it's it's interesting. You know you had significant leverage especially on the sgna component of that this quarter I was wondering, has anything changed there? Did you freeze spending? Did you?
Just change what the strategy and the investment was. Um, and you've not yet just implemented it. And uh how should we think about that kind of going forward? Thanks.
yeah, thanks for
Areas that I think that we can move faster and to deepen our advantage and where we plan to to invest additional capital, I would call out 4 areas. The first is accelerating, the pace of innovation across algorithms Center, integration, our next Generation Architects for like hybrid closed loop and our fully closed loop. Uh, as Eric was mentioning of what's in clinical trial right now, second is about being the market maker continuing to be the market maker and driving Market development by bringing the evidence. The scientific evidence to the healthcare professionals and patients and continuing to improve what we think is really Superior access and affordability in our markets.
Uh, the third that we're looking to invest more, is our commercial excellence
And our commercial engine and demand generation. I talk about selling our science in addition to our unique form factor and leveraging our brand as Eric was mentioning to create a more seamless, customer experience from lead generation to retention. And then finally, continuing to build global scale and resiliency in our supply chain to to, really serve the next leg of demand and increase our, our cost advantages.
Your next question comes from the line of Matthew O'Brien from Piper Sandler, your line is open.
Good morning. Thanks for taking the question. Um, I wanted to ask about that comment on an acceleration. I think an Maria mentioned in, um, competitive conversions in the quarter. Can you just talk a little bit about what drove that and, and is that the commentary about MDI acceleration or record? New patient numbers into 2 is that excluding the, the new competitive conversion. So on its own MDI, would have accelerated. And then the competitive conversions are on top of that, thank you.
Go ahead. Yeah. Uh, good morning. So let let me deal with the numbers first. So uh, yes. MDI accelerated and competitive. Conversions accelerated and both type 1 and type 2. Grew your year-over-year and sequentially it in terms of what's driving that, um, you know, we think it's a couple things first, we've delivered impactful Innovation, omnipod 5 is a safe effective, understood to be uh, really easy to use, and we've done a great job, making it accessible so that pay as you go access, um, with no commitment at low, co-pay makes it easy for folks to get started with that great technology. Additionally, you know, our our team is doing a great job, executing in the field and serving customers. And it's really those 3 things Innovation, access execution and marketing
Your next question comes from a line of Danielle and telphy from UBS. Your line is open.
Hey, good morning everyone. Thanks so much for, uh, for taking the question and congrats on on a really strong quarter here. Um, I just wanted to follow up on, on the, um, primary care physician side of things. And I'm just curious if you guys could talk about, maybe Eric, this is for you, sort of how the go to market strategy with primary care. Differs from endocrinologists, you know, Endo have been adopting pumps for a very long time Primary Care. You know, they're dealing with a lot of other things besides their that and in addition to their diabetic patients. So just just curious about how heavy the lift is in primary care versus endo and sort of how you guys are adapting to that. Thanks so much.
Thank you, Daniel, for the question. Uh,
You know, I would say a couple things 1 it really. If you asked about endos and high prescribing you know pcps in the US Marketplace and I would say our highly differentiated technology which is really simple to use.
Has had a remarkable early impact on people with type 2. Um who perhaps may have be fearful of complex, what they view to be complex technology. And because of that, um, we're starting to get really good adoption rates and what we're finding from the high prescribing, where the PCP audience, who are insulin intensive that Simplicity of Technology, coupled with the strong science, which shows, uh, the clinical outcomes of reducing A1C and improving time and range. And also, you know, slowing down, uh, the weight gain and slowing down lows for hypoglycemia, and you can use with glp1. We shared all this messaging at the Ada, but that coupled, with the really differentiated access and affordability, I think is what's driving even high? Prescribing insulin intensive, pcps, to get comfortable. Now, we're very much at early Innings and we plan to share a lot more on investor day, but though, in the past 12 months, those are some of the behaviors and the reason
Anything to add, maybe just briefly Danielle. I think, what what we see is that those who've been prescribing Aid. It's a question a lot about changing, how they think about Aid as it's relevant to the folks who live with type 2 diabetes, that they're seeing in their office every day. And so it's a lot about selling the science and helping them. See that as a great solution for that population that they're already caring. For when we go into an office that may not already be prescribing Aid. It is just a little bit of a conversation. It's about, you know, uh how do we provide support to them which may be new for them and helping them get folks trained and care for folks once they're on product? And so we educate on that experience and how we make that easy for them.
You. Our next question comes from the line of Jason Bedford from Raymond James. Your line is open.
Uh good morning and and congrats on the on the progress here. Um, just on the the international business.
Big step up sequentially growth. Accelerated off a already high-level. It didn't sound like it, but was there a notable contribution from any new geographies and and just 1 1 other quick 1 thinking of the, the volume price mix, where are you in terms of 05 adoption within your International base. Thanks.
Thank you for the question. Uh, Jason I'll have Anna to go. You can answer now. Absolutely, um, yeah, you know, 39%, uh, great growth. What we're seeing is omnipod 5 conversions are now up to about 50% of our total. That's a, a rapid growth from last quarter, which was about 40, so that price makes realization is kicking in. And the way to think about it is in that 39% this quarter, we had a bit of an outsized amount of that price mixed realization in the low double digits. So, uh, we're very pleased with the durable growth that we have across the markets as we mentioned in our, more established markets that we've been couple of years and the new ones just ramping up. So, durability of the growth in international is here, uh, with with us.
You. Our next question comes from a line of Matt. Mix from Barkley's. Your line is open.
Oh, thanks so much for taking the question, maybe just a follow-up on the last question on really impressive, uh, overseas growth. Um, if you could talk maybe a little bit about, um, about the, the uh, the mix, uh, in effect of having such a strong, uh, outside the US, you know, geographical contribution, you know, down the pnl if there is any any notable differences, um, in the way that kind of drives the pnl and then, then also, the way that you scale into some of these geographies, in addition to kind of the mix to
To uh to omnipod 5 is there is there a um I guess I guess a little bit of a follow-up to the last question, was their kind of a step up in in, I don't know uh, uh new distributorships or or or significant steps that that we can build off of. But the that maybe kind of feedback into your your views on the back half and and how you're thinking about guidance. Uh, thanks. Yeah, I'll I'll
Great, great question. I'll start and and and maybe others here will add. But um as we've talked about before we have these layers of built-in, um, growth. So we started UK and Germany over 2 years ago, then we went with France and Netherlands. And now we've expanded that to 9 more markets, um, having said that, keep key thing to point out is the launch of omnipotence, a lift. Then the second thing that happens is we add capabilities, right? We add sensors and that gives us a further lift. And third, we're working with a different, um, uh, Health authorities to continue to expand the access. So this is part of that durability. And the other thing to mention in the price, mix realization, is we're only 50% of our customer base has converted from Dash to a new pot 5. And this is in addition to all the MDI conversions that we're getting. Um, hope that gives you a flavor of our durable growth in international. Yeah, the only
Here in nordics in Australia Belgium Switzerland Canada, they haven't had material impact to date. A lot of the majority of our growth of owe us is coming from our 3, core markets. So we anticipate them to start to contribute in the next upcoming quarter.
You. Our next question comes from a line of Chris Pascal from nephron research. Your line is open.
Hi, good morning. This is Carol on for Chris banks for taking the question. Um, I just wanted to follow up on the gross. Margins at look like you would have exceeded 71% the first half be excluded inventory, charge and your outlook on tariffs has improved by about 30 bits.
And it looks like you reiterated your margin guidance for the year. So how are you thinking about the second half? And if you see potential for any underlying Improvement there, thank you.
Uh, you know, a great question. Uh, all the things you mentioned are are spot on. Um, I just want to point. Maybe in addition we're seeing on a year-over-year basis. Some of that FX pressure as well as quarter over quarter in the tune of of 30 basis points. Um, we feel the underlying performance of the business in operations is very strong year to date we're sitting at 70.7%. And for a full year guide of 71%, um we uh this represents 120 basis points, this guy represents 120 basis points expansion.
On the year-over-year basis. So stay tuned, we'll continue to update, but uh, we feel we're in very good position to deliver the 71%
And this concludes our question and answer session. I will now turn the conference back to Ashley McAvoy.
Thank you. Well, I appreciate everyone enjoying I'm clearly excited about the opportunity that we have to scale this remarkable business and create value for shareholders. But also importantly, improve the lives for millions of folks with diabetes. I wanted to thank June for your stewardship and wish you all the best. And I wanted to welcome Claire and really give a shout out to thank team, insulate, for unwavering dedication to people with diabetes and a remarkable quarter. Thank you.
Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect