Insulet Corporation
CEO : Dr. James R. Hollingshead Ph.D.
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 20.1% YoY | -52.7% | -40.5% | 2023-02-23 |
Wayde McMillan says,
Revenue Growth and Guidance
- Q4 2022 generated 23% revenue growth, exceeding the high end of guidance range, driven by total Omnipod growth of 36%.
- Total Omnipod revenue growth expected to be 17%-22% and total company revenue growth expected to be 14%-19% in 2023.
- Expected revenue growth to be more weighted to the first half of the year for U.S. Omnipod.
- Expected first quarter 2023 total Omnipod growth of 22%-25% and total company growth of 11%-14%.
International Revenue
- International Omnipod revenue increased 19% in Q4, above the guidance range driven by Omnipod DASH adoption.
- For 2023, international Omnipod revenue growth expected to be 6%-10% with an estimated favorable foreign currency exchange impact of approximately 100 basis points.
- Omnipod 5 expected to launch in the first international markets in 2023 but not expecting a material contribution to growth in international markets for Omnipod 5 this year.
Gross Margin
- Expected gross margin range of 65%-66% consistent with 2022 with tailwinds expected from increasing volume in the U.S. pharmacy channel and favorable geographical sales mix.
- Favorable impact expected to be more than offset by inflation, higher costs associated with the U.S. manufacturing ramp, and product line mix due to increasing Omnipod 5 volume.
- Expected gross margin in the first half of the year to be near the lower end of the range and the second half of the year to be closer to the high end of the range.
Operating Expenses and Margin
- Operating expenses expected to rise due to investments in sales and marketing efforts, expanding innovation pipeline and clinical efforts, scaling support functions, and phased launch of Omnipod 5 in international markets.
- Expected operating margin to be in the high single digits, similar to 2022 levels, with significant improvement in the second half of the year over the first half.
- Expecting to begin leveraging investments in 2024 and beyond for margin expansion.
Voluntary Medical Device Correction Net Charge
- Cost of revenue included a $21 million net charge or approximately 570 basis points associated with the voluntary medical device correction (MDC) in Q4.
- Excluding the Q4 MDC net charge, adjusted gross margin was 64.5%, representing a 480 basis point decrease in line with expectations.
- Voluntary medical device correction for Omnipod 5 MDC was $27 million, partially offset by a $6 million benefit due to revised estimated costs associated with the Omnipod DASH MDC.
Jim Hollingshead says,
OmniPod 5 Expansion Plans
- The company plans to launch OmniPod 5 in the UK in the middle of 2022 and in Germany by the end of the year.
- The company is working hard to execute in these markets quickly to expand its customer base and meet the high demand for its product.
- However, every market has a different set of regulations that need to be considered when getting onto the market.
Challenges with Existing Tube Pump Users
- In countries other than the US, it won’t be as easy for existing tube pump users to switch to OmniPod 5 due to regulatory differences.
- OmniPod’s business model relies on converting existing tube pump users, and these nuances in regulations may slow down the conversion process in some markets.
- However, there is high demand for the product across all markets, and the company is optimistic about its growth prospects.
Revenue Guidance
- OmniPod’s revenue model is based on an annuity ramp, meaning revenue builds as people get on the product and use pods.
- The company needs to be cautious when guiding revenue impact as it depends on the conversion rate of existing tube pump users in each market.
Underpenetrated Markets
- The company sees significant growth opportunities in underpenetrated markets where the standard patient is still using MDI.
- Innovations like OmniPod 5 can help these patients switch to pump therapy and improve their quality of life.
- These markets are still largely untapped, and the company is working hard to meet the demand for its product.
Q & A sessions,
Omnipod 5 and Innovation Pipeline
- Strong start in the first 5 reported months with Omnipod 5, seen as sustainable
- Significant innovation pipeline to come with iOS integration with G7 and Libre, pursuing an indication for type 2 for Omnipod 5
- Confident that the platform will continue to grow
Gross Margins and Operating Margins
- Committed to margin expansion, but had to hit pause due to macroeconomic pressures
- Decided to continue investing heavily in commercial expansion and R&D through inflationary cycle, leading to higher costs and pressure on gross margins
- Investments made up till now and through 2023 expected to put company in a position to start leveraging gross margins and operating margins again starting in 2024
Customer Conversions and New Customer Starts
- Existing customers (classic Omnipod and DASH) converting over to Omnipod 5 a big driver of current growth rate
- Assuming most conversions will be done by the end of 2023, which will affect sustainability
- Record new customer starts from MDI and competitive switches, way above market growth rate
IP and Bigfoot Biomedical
- Filed a record number of patents this year, made settlements, and acquired patents to grow IP position and be better positioned defensively and offensively
- Bigfoot Biomedical acquisition with a rich set of intellectual property patents and filed patents seen as a positive for innovation and commercialization offerings
Volume Benefit and Share Taking
- $7 million channel increase in Q2 due to Omnipod 5
- $16 million script benefit in Q3 and $15 million in Q4 due to conversions and skipping orders
- Normalized for above-mentioned benefits, talking about a 4% impact in the US
- Record number of competitive switches and new customer starts, way above market growth rate, expected to continue as company is a share taker
No bad stock 