Q1 2024 Earnings Summary
- Insulet is set to expand into the large type 2 diabetes market with Omnipod 5, expecting FDA label extension by year-end, which could drive dramatic growth, as they are already the clear leader with Omnipod DASH in type 2 and ahead of competitors.
- Integration of Omnipod 5 with Abbott's FreeStyle Libre 2 CGM is opening up an entirely new market segment, with early positive results in the U.K. and the Netherlands, potentially expanding their addressable market among Libre 2 users.
- Strong competitive advantage through broad pharmacy channel distribution, making Omnipod 5 accessible within 5 miles of 85% of the U.S. population, a model difficult for competitors to replicate, reinforcing their market leadership.
- U.S. new customer starts did not increase year-over-year in Q1 2024, which may indicate slowing growth in the domestic market. James Hollingshead stated, "Year-over-year in Q1, overall new starts were not up..."
- Sequentially lower Q2 2024 revenue guidance suggests potential short-term headwinds, including wholesalers reducing G6 pod inventory, which may impact sales. Analyst Travis Steed noted, "It looks like the guidance you gave is sequentially down..." Ana Chadwick responded, "We believe the second half will be greater growth than the first..."
- Expected increase in the effective tax rate to approximately 20% could reduce net income in future periods. Ana Chadwick mentioned, "Subsequently, our effective tax rate may increase to an estimated annualized operational run rate of approximately 20% for the near term."
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Q2 Guidance and G6 Destocking
Q: Will Q2 growth be sequentially up despite G6 destocking?
A: Management expects sequential growth in Q2 but assumes a roughly $10 million impact from G6 destocking as they transition to G7 pods. They reaffirmed full-year guidance and believe growth will be stronger in the second half as new products launch. -
U.S. New Patient Starts
Q: Were U.S. new patient starts up year-over-year in Q1?
A: Overall new starts were not up in Q1, but MDI conversions increased, highlighting strength in attracting patients from multiple daily injections. Management expects sequential growth throughout the year and anticipates a record number of new customer starts in 2024. -
G7 Integration as Growth Driver
Q: Why will G7 integration boost new starts in H2?
A: With G7 prescriptions overtaking G6, integrating G7 will expand the addressable CGM user base. This is expected to drive more new customer starts in the second half. -
Type 2 Market Expansion
Q: Is an inflection in type 2 uptake approaching?
A: Management is very bullish on the type 2 market, expecting dramatic growth with the upcoming FDA label extension for Omnipod 5. Additional investments in sales and support may be needed to capture this opportunity. -
International Expansion
Q: Why isn't H2 international growth higher than H1?
A: Despite strong adoption of Omnipod 5, different dynamics and reimbursement cycles in Europe mean growth will ramp over time. They raised international revenue guidance by 500 basis points and will update as launches progress. -
Margin Outlook
Q: How will margins be affected by sales force expansion?
A: Operating margin is strong, with 69.5% gross margin this quarter, expected to remain robust. While investments in sales force and products will continue, management aims to balance growth investments with margin improvement. -
GLP-1 Effects on Insulin Adoption
Q: Do GLP-1s accelerate insulin use?
A: Claims data show patients starting GLP-1s are more likely to adopt insulin in the same year. This suggests GLP-1s may lower A1c but not sufficiently, leading to insulin initiation. -
Omnipod GO Launch Timing
Q: When will Omnipod GO be fully launched?
A: Timing has not been provided for Omnipod GO's full release. The commercial pilot aims to determine the right model before expanding. -
Pump Market Growth
Q: Will pump market growth accelerate?
A: The market is growing, driven by widespread CGM adoption and Omnipod 5's ease of use. Omnipod leads in converting MDI patients, fueling expansion. -
Libre 2 Integration
Q: What to expect from Libre 2 integration with Omnipod 5?
A: Integration with Libre 2 opens access to a broad user base, expanding the addressable market. Early results are positive, and management is excited about uptake. -
Competitive Switches
Q: Are competitors holding onto their installed base more tightly?
A: Management continues to be the net winner in competitive switching, gaining more customers than they lose. Omnipod 5 is considered the best offer in the market.
Research analysts covering INSULET.