Q1 trends

Growth at Insulet’s U.S. business led the company to raise its revenue forecast for the year. The Acton, Mass.-based maker of insulin pumps reported the second-highest number of U.S. customer starts in the company’s history. Its U.S. revenue of $259 million, a 49% increase year-over-year, also set a record for sales growth in the first quarter, CEO Jim Hollingshead said. 

The company’s newest tubeless pump, the Omnipod 5, made up almost 95% of new U.S. customer starts, the CEO added.

“We're clearly winning in the market right now. We're bringing a lot of people out of [multiple daily injections] into the market, and we're taking competitive share and driving competitive switching, which continues to run ahead of our historic pattern and ahead of, frankly, our expectations,” Hollingshead said in a Thursday investor call. 

Insulet’s net income decreased in the quarter as operating expenses rose above the company’s expectations, CFO Wayde McMillan said. The higher costs stemmed from ramping up sales and marketing for the Omnipod 5 and its U.S. manufacturing efforts, as well as expanding the company’s innovation pipeline. In Europe, Insulet plans to launch its Omnipod 5 in the U.K. mid-year and in Germany in the fall. 

The patient additions “will have a meaningful impact on sales in future quarters given the business’s pay-as-you-go model,” William Blair analyst Margaret Kaczor wrote in a research note on Friday.

Insulet’s planned 2024 launch of a tubeless pump for basal insulin users is another long-term catalyst that could expand access for people with Type 2 diabetes, Kaczor added. 

CGM integration

The company is working to integrate its devices with Abbott’s and Dexcom’s newest continuous glucose monitors, as the two companies account for the majority of the market. 

Hollingshead declined to provide a time frame for the integration, adding that the company was moving as fast as it can. Integration with continuous glucose monitors is a piece of Insulet’s growth strategy as it allows patients to use hybrid closed loop systems where the CGMs and insulin pumps work in tandem. 

“Between those two players, they have millions of patients out there that are already using their sensors,” Hollingshead said. 

Currently, about 40% of people with Type 1 diabetes in the U.S. use an insulin pump, and for Type 2 diabetes that number is in the single digits. 

“Our sources indicate CGM U.S. Type 1 market penetration is nearing 80%, making us even more confident in Omnipod 5’s potential to grow penetration to well over 70% in the Type 1 market,” the CEO said, adding that he believes the device’s ease of use, cost and access can bring customers into the market who would have otherwise never considered an insulin pump.

Restructuring

Insulet also announced a restructuring on Thursday, which Hollingshead said should help the company continue its momentum and capture growth opportunities.

The changes involve creating a chief product and customer experience officer, and the company is promoting Eric Benjamin, its executive vice president of innovation and strategy, to that role. Insulet also is creating a chief technology officer position, with Mark Field, the vice president of software engineering, moving into that post. 

Insulet Chief Commercial Officer Bret Christensen is leaving the company on Friday, and Insulet said it’s splitting that work into two separate positions to focus more on regional and local markets. The company is searching for a U.S. general manager and is keeping on Patrick Crannell as international general manager. Crannell will now report directly to the CEO. 

Forecast

Insulet raised its forecast for 2023 sales growth to 18% to 22%. The previous range was 14% to 19%. In addition, Omnipod sales are expected to climb 21% to 25%, a jump from the previous range of 17% to 22%.

The company continues to forecast a gross margin of 65% to 66%, excluding $8 million related to recalls last year. Insulet had flagged battery problems with Omnipod DASH controllers, which could include battery swelling, fluid leaking or extreme overheating.