Q3 2024 Earnings Summary
- Insulet's Omnipod 5 is experiencing strong growth in both type 1 and type 2 diabetes markets, with sequential and year-over-year new customer starts growth in the U.S., including in both type 1 and type 2 populations. Growth is driven by conversions from multiple daily injections (MDI), with over 85% of U.S. new customer starts coming from MDI users. The company is bullish on the significant growth potential in the type 2 market, expecting penetration to double or triple over the next few years.
- Omnipod 5 is now the #1 insulin pump for new pump users in Europe, demonstrating strong international momentum. The company achieved international Omnipod revenue growth of 35%, fueled by demand for Omnipod 5 across all international markets. Despite typical seasonality during summer months, they maintained stable sequential new customer starts.
- Insulet maintains a strong competitive position due to its high customer retention rates, running in the low 90% range and very stable , and its advantages in the pharmacy channel, where Omnipod 5's ease of use and widespread access contribute to growth. Additionally, integrations with popular CGM sensors like Dexcom's G7 and Abbott's FreeStyle Libre 2 Plus are driving growth and providing tailwinds for new customer starts.
- Insulet anticipates lower retention rates among certain segments of type 2 diabetes patients, stating that "it's quite likely that we'll see different usage patterns and maybe some lower retention in parts of the type 2 population."
- Increased competition in the pharmacy channel may pressure Insulet's pricing and market share, as competitors are entering the space and could push on pricing as they grow bigger.
- Past customer service issues during the Omnipod 5 launch due to high demand, where "we had so much demand that... we had trouble answering the phones," may pose challenges if similar surges occur in the future.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +26% | The increase to $543.9 million was driven by continued strong adoption of Omnipod therapy in both U.S. and international markets, supported by the company’s pay-as-you-go pod model and pharmacy channel expansion. This growth over the prior year benefited from Omnipod 5 launches and higher customer retention rates. |
Omnipod Revenue | +26% | Rising to $533.6 million, Omnipod revenue growth was fueled by new customer starts converting from multiple daily injections and competitor pumps, as well as the recurring nature of pod usage. The adoption of advanced automated insulin delivery (AID) features also supported higher sales volumes. |
• U.S. Omnipod | +23% | Reaching $395.6 million, U.S. Omnipod growth was powered by the pharmacy channel, where pods command a higher average selling price, and by sustained demand for Omnipod 5. Offsetting factors like inventory management at distributors were outweighed by broad market uptake. |
• International Omnipod | +36% | Increasing to $138.0 million, international revenue growth followed expansions of Omnipod 5 availability in key markets (e.g., Europe), favorable currency trends, and robust adoption across multiple countries. New launches and broader reimbursement improved market share globally. |
Operating Income (EBIT) | +61% | Surging to $88.1 million, EBIT growth benefited from higher sales volumes, improved gross margin (via manufacturing efficiencies and volume leverage), and controlled operating expenses. This improvement was substantial compared to the prior year’s investments in product launches. |
Net Income | +49% | At $77.5 million, net income rose on the back of strong top-line growth, effective expense management, and lower relative one-time charges versus the prior year. Increased coverage through pharmacy channels and ongoing international expansion also contributed to the bottom line. |
Diluted EPS | +46% | EPS improved to $1.08, reflecting higher net income driven by revenue growth and better operating leverage. The reduction of noncore spending relative to the prior year’s activities and absence of major litigation or transition costs from earlier periods further boosted earnings per share. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Omnipod Revenue Growth | Q4 2024 | no prior guidance | 13% to 16% | no prior guidance |
Total Company Revenue Growth | Q4 2024 | no prior guidance | 12% to 15% | no prior guidance |
U.S. Omnipod Revenue Growth | Q4 2024 | no prior guidance | 9% to 12% | no prior guidance |
International Omnipod Revenue | Q4 2024 | no prior guidance | 30% to 33% | no prior guidance |
Drug Delivery Revenue | Q4 2024 | no prior guidance | $7 million to $8 million | no prior guidance |
Total Omnipod Revenue Growth | FY 2024 | no prior guidance | 21% to 22% | no prior guidance |
Total Company Revenue Growth | FY 2024 | no prior guidance | 20% to 21% | no prior guidance |
U.S. Omnipod Revenue Growth | FY 2024 | 18% to 21% | 19% to 21% | raised |
International Omnipod Revenue | FY 2024 | 18% to 21% | 25% to 27% | raised |
Drug Delivery Revenue | FY 2024 | -40% to -50% | -5% to -10% | raised |
Gross Margin | FY 2024 | 68% to 69% | 69% | raised |
Operating Margin | FY 2024 | 14% | 14.5% | raised |
Non-GAAP Effective Tax Rate | FY 2024 | no prior guidance | 20% to 25% | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Total Omnipod Revenue Growth (YoY) | Q3 2024 | 21% to 24% | 26.4% growth (from 422.0To 533.6) | Beat |
Total Company Revenue Growth (YoY) | Q3 2024 | 18% to 21% | 25.6% growth (from 432.7To 543.9) | Beat |
U.S. Omnipod Revenue Growth (YoY) | Q3 2024 | 21% to 24% | 23.4% growth (from 320.6To 395.6) | Met |
International Omnipod Revenue (YoY) | Q3 2024 | 21% to 24% | 36.1% growth (from 101.4To 138.0) | Beat |
Drug Delivery Revenue (USD Millions) | Q3 2024 | 3 to 4 | 10.3 | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Omnipod 5 Growth | Consistently emphasized robust growth across Q2, Q1, Q4, driven by new customer starts and global expansions. | Reported 26% total revenue growth with strong uptake in T1 and T2 markets; now the #1 insulin pump for new users in Europe. | Continued strong growth and leadership |
MDI Conversions | Persistently high MDI-to-pump conversion rates, with gradual increase in type 2 adoption. | Over 85% of U.S. new starts from MDI; T2 represented 25% of new starts in Q3. | Stable high rate of conversions, expanded T2 adoption |
International Expansion | Prior quarters featured successful launches in the U.K., Germany, France, cited as main drivers of international growth. | Omnipod 5 is #1 for new pump users in Europe, strong performance in key European markets. | Ongoing international leadership and further expansions |
Pharmacy Channel Advantages | Highlighted as a major differentiator, with Omnipod better suited than tubed pumps for retail and specialty pharmacy. | Maintains well-established presence, leveraging PBM relationships and part D reimbursement; confident in defending pricing. | Continuing focus on pharmacy as a competitive advantage |
CGM Integrations | Earlier updates on limited market releases for G7 and the first-to-market Libre integration in select European countries. | Full market release of Omnipod 5 with Dexcom G7 in the U.S. and further Abbott Libre 2 Plus integration in Europe. | Moving from limited releases to broader rollouts, offering additional sensor choices |
Shifts in Near-Term Guidance | Prior quarters consistently raised revenue outlook, factoring in new product ramps and seasonal inventory dynamics. | FY24 guidance raised to ~20–21% total revenue growth; Q4 year-over-year comparisons affected by prior stocking, while annuity model shifts some revenue into 2025. | Guidance repeatedly increased, timing affected by launches and stocking |
Competitive Landscape | Previously acknowledged fewer competitive switches overall, with most growth from MDI conversions. | No direct reference to the Medtronic-Abbott partnership; Insulet noted continued conversions from a competitor and high retention. | Focus on MDI overshadowing direct competitive rivalry |
Margin Pressures | Prior mention of one-time charges, facility ramps, but also ongoing improvements in manufacturing. | Not specifically flagged for Q3; gross margin near 69% driven by efficiencies and volume. | Fewer references to margin headwinds, stable improvements |
Type 2 Diabetes Focus | Strong interest in T2 across earlier calls, including Omnipod GO pilots and discussion of significant upside. | Type 2 label expansion in August 2024 added a large underpenetrated market; T2 makes up 25% of new U.S. starts. | Emphasis increased post-label expansion, viewed as major growth driver |
Potential Capacity Constraints | No mention of capacity concerns in Q2, Q1, or Q4 [No references]. | Insulet expressed confidence in serving T1 and T2 without constraints; no capacity issues noted. | No immediate constraint concerns |
Decreasing Competitive Conversions | Previous quarters showed fewer competitive switches, with emphasis on MDI growth. | Not discussed; instead, an uptick in competitor conversions was reported for the second consecutive quarter. | Contradicts prior notes of declining switching, conversions are up |
Higher Effective Tax Rate | Previously recognized sizable noncash benefits, projecting around 20% long-term tax rate. | Released $12M in valuation allowance, expecting a 20–25% effective tax rate for 2024 and stable in 2025. | Continuing normalization as valuation allowances release |
Rising Operating Expenses | Discussed in prior calls as investments in R&D, manufacturing, and sales expansions. | Not specifically mentioned for Q3 [No references]. | No updated Q3 details, historically rising costs for growth |
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Type 2 Market Growth
Q: Is the industry ready for increased Type 2 penetration?
A: James stated they are leading and developing the Type 2 market, seeing a lift in September after being the first with an AID indication for Type 2. He expects Type 2 penetration to potentially double or triple over the next few years, adding growth without impacting Type 1 efforts. -
2025 Growth Outlook
Q: What's the opportunity with new patient starts in 2025, especially with Type 2?
A: Ana is excited about growth prospects and will provide detailed guidance in February. She highlighted that their annuity model means most revenue growth from new customers will come in 2025, especially as innovations launched in the second half contribute. Price accretion in international markets and strong positioning support 2025 growth. -
Competitive Landscape
Q: How are you approaching competition into 2025?
A: James noted that despite one competitor's comments, they have industry-leading retention that remains high and stable. They've seen an uptick in conversions from that competitor to Omnipod 5 for two quarters. They focus on driving growth by bringing MDI users onto Omnipod 5, where they are clear leaders. -
Defending Pharmacy Channel Pricing
Q: How will you defend pricing in the pharmacy channel against competitors?
A: James stated they have a very strong position in the pharmacy channel because Omnipod fits well there. They have Part D reimbursement and long-term relationships with PBMs built over seven years. They negotiate contracts annually and are confident in defending their position and pricing. -
Q4 Guidance and Growth
Q: Will Type 2 launch maintain or accelerate U.S. growth despite Q4 deceleration?
A: Ana explained they anticipate growth over 20%, and the annuity model means benefits from new customer starts will increase through 2025. James added they have clear sequential growth in new customer starts in both Type 1 and Type 2, providing confidence in Q4 guidance and a ramp into 2025. -
Impact of CGM Integrations
Q: How have CGM integrations impacted new starts or existing customers?
A: James said sensor integrations have been terrific, with G7 integration in the U.S. being a material part of new customer starts. They launched sensor choice integration in the U.K. and Netherlands, offering G6 and Libre 2, and expect the upcoming Libre 2 integration in the U.S. to create growth tailwinds. -
European Omnipod 5 Adoption
Q: How high can European Omnipod 5 adoption go?
A: James expects a similar dynamic as in the U.S., with Omnipod 5 becoming the predominant product over time. Due to four-year reimbursement cycles, conversions will be slower, but Omnipod 5 is already the #1 pump in their European markets. Strong new customer starts are anticipated as they roll out Omnipod 5 internationally. -
Retention Rates
Q: How do you measure retention, and how is it trending?
A: James explained they have high-fidelity data from cloud connectivity, with retention stable in the low 90s. Retention remains very high and doesn't vary much over periods. -
Algorithm Development
Q: Update on fully closed-loop algorithms and their applicability?
A: James mentioned they have two programs working on different approaches, including one closer to a fully closed loop. Accelerated by real-world data, they've entered early clinical trials. Current Omnipod 5 algorithm already delivers excellent glycemic control, but they see opportunities to further improve. -
Basal-Only Patients and Type 2 Retention
Q: Updates on basal-only patients and Type 2 retention?
A: James noted that basal-only patients benefit from Omnipod 5, with SECURE T2D data showing similar benefits as MDI patients. They're bullish on both sides of the Type 2 market. Retention has remained strong, though parts of the Type 2 population may show different usage patterns, possibly lower retention. They plan to build customized offerings to improve retention. -
Customer Service Focus
Q: Has launching AID systems impacted patient service focus?
A: James stated they're focused on building a differentiated end-to-end customer experience. They've scaled commercial capabilities, including customer care and product support, and are committed to providing the best experience to users now and in the future. -
European Performance and Pricing
Q: Is the European #1 status in all of Europe, and how sustainable is price benefit?
A: James clarified they are #1 in the markets they serve in Europe, impressive without Omnipod 5 in all markets. Ana mentioned that price accretion is expected to continue as they launch in new markets and negotiate premiums for Omnipod 5 due to its value.