Insulet Corporation (NASDAQ:PODD) Q2 2025 Earnings Call Transcript

Insulet Corporation (NASDAQ:PODD) Q2 2025 Earnings Call Transcript August 7, 2025

Insulet Corporation beats earnings expectations. Reported EPS is $1.17, expectations were $0.93.

Operator: Good morning, ladies and gentlemen, and welcome to the Insulet Corporation Second Quarter Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, June Lazaroff, Senior Director, Investor Relations.

June Lazaroff: Good morning, and thank you for joining Insulet’s Second Quarter 2025 Earnings Call. With me today are Ashley McEvoy, 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 Product and Customer Experience Officer. Both the replay of this call and the press release with our quarterly results and guidance will be available on the Investor Relations section of our website. We also included supplemental information, which can be found within Insulet’s corporate presentation on our website. Before we begin, we remind you that certain statements made by Insulet 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 SEC 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 EBITDA, adjusted tax rate and constant currency revenue, which is revenue growth excluding the effect of foreign exchange. These measures align with what management uses as supplemental measures in 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.

Ashley A. McEvoy: Thanks, June, and good morning, everyone. As of yesterday, I have 100 days under my belt. I visited our top 4 markets in 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, health care providers, investors, analysts and most importantly, our loyal Podders. The welcome by Team Insulet and the diabetes community has been warm and gratifying, and I’m eager to share insights and priorities 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 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 PODD. We drove both year-over-year and sequential growth in new customer starts across all of our strategic growth areas: U.S. Type 1, U.S. 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 full-year guidance for revenue growth and adjusted operating margin, which Ana will walk you through. For now let me turn to some observations for my first 100 days. First, I’ve been incredibly impressed by the passion and commitment of our Insulet team and how that energy has been channeled into the product and into the community.

Everyone here cares deeply about revolutionizing diabetes management, and that intense focus has earned Insulet a unique and advantaged position at the nexus of Consumer Health, med tech and health tech. Going back to Insulet’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. Omnipod 5 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.

Omnipod 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-T2D, our 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 use 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 health care providers are prescribing Omnipod 5 in the United States.

This is up approximately 20% from last year and continues to grow. My conversations with Podders 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 a shame 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 sleep over 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 Podders has required us to divide and invest in thoughtful solutions across our business. Over the past decade, we’ve invested more than $1 billion in 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. Insulet’s proprietary tooling, equipment and processes enables a sustainable cost advantage. Similarly, for patient access, 8 years ago, Insulet began building critical payer relationships and negotiating pharmacy channel distribution in the U.S. to make Omnipod available where patients pick up their insulin. Today, our near 100% pharmacy model and unique Medicare Part D coverage make Omnipod easy to find and easy to afford.

You can get an Omnipod at more than 47,000 pharmacies in the United States, often for just $1 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 health care. Omnipod has grown into a beloved grassroots brand, fueled by Podders’s word-of-mouth and advocacy. In the U.S., Omnipod is the most prescribed and most requested AID system. It is also #1 in new customer starts in the U.S. and the EU. Our more than 500,000 Podders are passionate and engaged R&D partners with a deep interest in continuously enhancing our products for the benefit of everyone with diabetes.

Building off of this grassroots 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 sum, I’m even more confident than I was 100 days ago in Insulet’s unique strength 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 unpenetrated market. We have best-in-class technology, manufacturing and patient access that we have used to create a category of [ one ]. 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 emphasized 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 U.S. type 1, driven primarily by new prescribers and new patients. The seamless expansion of our U.S. sales team has been and will continue to be a key priority as we further 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 the first mover in U.S. 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 adopters. Customer satisfaction is high, and we are seeing remarkable outcomes. And those 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, 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 U.K., 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 our 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 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 Podders to use their phones versus controllers typically yield benefits to engagement, retention and outcomes.

While we have seen rapid adoption of our iOS and Android apps, we still have approximately 55% of eligible U.S. Podders still predominantly using their controller. We have considerable upside as app use grows 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 four areas we’ll 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.

Second, building the power of our brand globally and strengthening our direct-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 U.S. 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 earlier 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 ambition and long-standing focus on solving unmet patient and clinical needs. We look forward to sharing more at our upcoming Investor Day on November 20 in Acton, Massachusetts. Before I close, I would like to thank the Insulet 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 Ana to discuss second quarter results and guidance in more detail.

Ana Maria Chadwick: 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 U.S. for both type 1 and type 2 and in international. Consistent with prior quarters, over 85% of our U.S. 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 remains stable. Our team executed across the business, delivered exceptional top line results while also expanding adjusted operating margin and increasing profit.

We are proud of this accomplishment and are raising full-year revenue guidance, making 2025 our tenth 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, U.S. 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. U.S. Omnipod revenue growth benefited by approximately 350 basis points from a prior-year stocking dynamic and an approximate 150 basis point tailwind related to the timing of rebates.

As we commented 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, foreign currency was favorable 620 basis points over the prior year. International growth was primarily driven by continued demand for Omnipod 5 and customer base growth. As expected, positive price/mix realization also contributed to growth as customers shift from Omnipod DASH to Omnipod 5. We are seeing strong growth in the U.K., Germany and France, in addition to the other countries where we have launched Omnipod 5. We are also continuing to work with local health authorities to expand access and broaden our sensor integration road map to drive adoption.

Moving down to P&L. 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 Omnipod 5, our latest technology. We are pleased to have delivered 70.7% gross margin 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, especially as we develop the type 2 markets. Adjusted operating margin was 17.8%, and adjusted EBITDA margin was 24.3% in the second quarter. Our team is executing well across our growth objectives and reinvestment plans, which have together 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 $125 million authorization and also refinance our term loan B, reducing the rate by 50 basis points, which lowers our interest expense by approximately $12 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 Omnipod 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 U.S. Omnipod, we expect third quarter growth of 21% to 24%. For international Omnipod, we expect third quarter growth of 33% to 36%. On a reported basis, we are assuming a favorable impact of 300 basis points from foreign currency. Now turning to our full year 2025 outlook. For the full year, we are raising our total Omnipod 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 a reported basis, we are assuming favorable impact of 100 basis points from foreign currency for the year. For U.S. Omnipod, we are raising our revenue guidance range to 22% to 25%, and driven by customer base growth. We 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 U.S. new customer starts in 2025. As a reminder, our U.S. 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 a reported basis, we are assuming a favorable impact of 300 basis points from foreign currency. We expect to drive strong growth in the U.K., Germany and France, while also ramping adoption in our newer international markets, all supported by benefits from new sensor integrations and customer upgrades from Omnipod DASH to Omnipod 5. We expect year-over-year growth in international new customer starts in 2025. While volume remains the primary driver of our international revenue growth, our guidance also reflects a modest uplift from positive price/mix 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 U.S. tariffs. Our strong manufacturing position and efficiencies from scale mitigate and absorb this impact. For the year, based on our strong performance to date and continued operational leverage across the business, we are raising our adjusted operating margin guidance to a range of 17% to 17.5%. 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 cash 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 Insulet 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 addition reflects the continued strengthening of our leadership team under Ashley’s direction as we look to the future. We are incredibly grateful to June Lazaroff 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.

Operator: [Operator Instructions] Our first question comes from the line of Robbie Marcus from JPMorgan.

Q&A Session

Unidentified Analyst: This is Lilly on for Robbie. 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 growth?

Ashley A. McEvoy: Thank you, Lilly. Listen, we’re pleased to see that really, our strategy is working. We continue to lead in type 1. As you mentioned, we’re driving very strong adoption as the first mover in type 2. Our international growth is accelerating, and we are continuing to invest in platform innovation and clinical outcomes. I mean U.S., you can see from — we command the largest customer base there. Our new customer starts are off to acceleration, both year-over-year and sequentially. And I think in the U.S., we’re really seeing very strong adoption of the Omnipod 5 based upon very, very strong clinical outcomes that we’ve been sharing with the ADA. And we continue to integrate those with the latest sensors, as mentioned with the G7 and iOS compatibility.

And I would say type 2 in the U.S., 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 in equity of our — 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 OUS, as we mentioned in our remarks, we have a very strong concentration in three key markets: U.K., France and Germany; which comprise the majority of our business, OUS. 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 5 now to inclusive of total of 14 markets, and all of those are driving strong adoption. Thank you for the question, Lilly.

Operator: Your next question comes from the line of Travis Steed from Bank of America.

Travis Lee Steed: Congrats on quarter and congrats on hiring Claire, she’s a well-loved IR person. So a good get. And I wanted to ask on type 2 and the new starts that accelerated this quarter. what do you think kind of drove that acceleration? Can the acceleration kind of continue in the back half of the year? And just kind of get an update on kind of the overall type 2 opportunity here.

Ashley A. McEvoy: Thank you, Travis. Well, listen, I mean, type 2, as we know, is like a massive opportunity with a large TAM, 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 ENDOs and high-prescribing PCPs comfortable with that. When we look at Type 2, the framework that we’re abiding by is, number one, really sharing our strong clinical evidence. We shared this again with the ADA and SECURE-T2D. We do, in fact, lowered A1cs and we improved time and range. Second is really we have very strong market access and ease of use. Our — I’d like to say not all pharmacy access is created equal, but we have access to 47,000 pharmacists, Travis, where we had also coverage.

Over 300 million lives are covered with Omnipod in a preferred position with very low co-pays. In fact, on average, it’s around $1 a day for our patients, and that really has enabled very strong access as well as affordability. We’ve been working on our field. You mentioned that we’ve been expanding our field force, getting them really comfortable to not to sell on our unique form factor, but to also sell in the science. And also, we are sourcing not just patients from MDI, but as Ana mentioned in her results, we actually did experience our quarter, the highest in 8 quarters, where we sourced some of that volume from competitive users. So I just think that we just got to continue to get the word out that we have a highly differentiated technology with really strong outcomes.

Operator: Your next question comes from the line of Jeff Johnson from Baird.

Jeffrey D. Johnson: Congrats on strong quarter. Ashley, you know as we’re all trying to get to know you a little bit better here. I think one of my questions just such a strong raise in 2Q here, and 2Q can be a tricky quarter because I think a lot of companies would like to leave a little bit of room for 3Q and 4Q as well. So just your overall framework and how you think about guidance, do you like to set guidance at 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 guidance, especially after today’s strong rate.

Ashley A. McEvoy: Thank you, Jeff. I think what Ana’s commentary on future guidance, it really reflects the remarkable business that we’ve had year-to- date in 2025. And my philosophy and guidance really doesn’t change from what Insulet has been sharing with the community. And I’ll turn it to Ana to add some remarks.

Ana Maria Chadwick: Yes. We set guidance with the full intent to hit it. Nothing has changed in our fundamentals. We’re excited to have raised guidance here by 5 points. And it’s actually 3x the beat we had here in the second quarter, and this reflects that we’re seeing the momentum, and we’re leaning in, and we’ll keep you all updated.

Operator: Your next question comes from the line of Larry Biegelsen from Wells Fargo.

Unidentified Analyst: This is Simran on for Larry. Congrats on the a really strong quarter. Maybe just to focus on the U.S. business, if I take all the pieces of the guidance, it implies about 14% to 22% growth in Q4, 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? Is 20% growth still a good way to think about the U.S. business, going forward?

Ashley A. McEvoy: Thank you for joining, Simran. I’ll turn it to Ana to make some remarks.

Ana Maria Chadwick: Great. Our underlying business trends are very stable. Let me unpack some key dynamics. Specific in the U.S. we have talked about stocking and rebate dynamics. When you take those into account, our first half normalized growth rate is 24%. And in the context of that, our back-half guidance is very strong. We do not anticipate anything changing here, just the momentum continuing, and we expect to have a positive update for all of you guys as we get into our third quarter earnings call.

Operator: Your next question comes from the line of Joanne Wuensch from Citi Bank.

Joanne Karen Wuensch: Nice quarter. Internationally, it sounds like it’s going quite well for you with the target on 4 countries. How do you think about expanding those or expanding the footprint as you push further outside the United States?

Ashley A. McEvoy: Thank you, Joanne, for the question. Yes. I mean our international business had a very strong quarter. And really, our kind of three key drivers of profitable growth outside of the Unites are: one, continued penetration of our existing markets like the U.K., France and Germany, where we — I would say we have strongholds and there’s lots of opportunities to really increase penetration in those stronghold markets. In those markets, with the launch of Omnipod 5 and the conversion from DASH to Omnipod 5, we are commanding a positive price mix realization. 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.

Some of the markets that we’ve launched Omnipod 5 like Canada, Australia, the Netherlands; they’re all going very well. We’ve queued up some additional markets that we plan to share with you on November 20 at Investor Day. But we really are having a balanced strategy, I would say, on going deep and valuing depth as we assess layer what markets that we go broad on.

Operator: Our next question comes from the line of Shagun Singh from RBC.

Shagun Singh Chadha: I was hoping you could shed some light on second-half guidance, I think it assumes about 21% selling day adjusted growth versus 30% in the first half. So can you maybe just elaborate on some of the assumptions behind the 2025 guidance? What drives the step down in Q2? Is it conservatism or are there other factors to consider? And you did call out for U.S. Omnipod revenue in Q2, you called out some stocking dynamic and some tailwinds around rebates. 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.

Ana Maria Chadwick: Sure, Shagun. This is Ana. As I mentioned, on an underlying basis, our business is very, very stable here. And unpacking some of the dynamics you just called stocking as one, absolutely, and then also the rebate dynamic. So when you put all of those together, our first half U.S. normalized growth rate is up 24%. And in that context, the guidance here is very strong that we’re — and we’re lifting by quite a bit, as I mentioned just now, we are raising our guidance by 3x the beat that we had here in the second quarter. So we’re leaning in because we’re seeing this momentum speaking and being strong for us. And we look forward to giving you a positive update as we go into our third quarter earnings. So everything is trending, and growth is strong.

Operator: Your next question comes from the line of David Roman from Goldman Sachs.

David Harrison Roman: I just want to echo Travis’ comments on Claire joining the company, the opportunity to work with her directly and think she’ll be a great addition to the team. And I just want to also thank June for all of her support as we’ve gotten up to speed here on the company. Maybe I’ll just ask on a comment that you made kind of towards the latter part of the call around increasing CapEx to 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 original expectations and a view that, that can continue here and how we should kind of put those pieces together?

Ashley A. McEvoy: Yes. Thank you for the question, David. 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 Acton, which are fully up and producing high-quality pods, as well as extending our presence in Malaysia and getting that plant we’re coming up on our year anniversary to really meet the global demand. And we’ve been a pioneer in advanced automation and manufacturing capabilities, and we’ll continue to do that. So what Ana was referencing is you’re going to see us continue to invest in our supply chain build-out to make sure that we stay ahead of the curve of meeting global demand.

Operator: Your next question comes from the line of Michael Polark from Wolfe Research.

Michael K. Polark: I’m interested in the comment on the recent Medicare proposal around competitive bidding and shifting payment in the DME channel to pay over time. Look, I understand you’re not directly exposed here, you have chosen a different business model. And so kind of nothing to say on that. But if this moves forward, the industry stands to change quite a bit, and I’m interested what PODD is thinking about as to how to stay ahead of those potential shifts as you digest what’s a very complex suggestion rule from the government.

Ashley A. McEvoy: Thank you for the question, Mike. And listen, we’ve been reviewing the CMS proposal. We clearly support the increased access to the latest technology for diabetes management. As you know, we are available to patients on an as-you-go basis, a pay-as-you-go, and it’s sold with near 100% of our distribution through the pharmacy channel, as I mentioned, 47,000 pharmacies. So we clearly think that insulin delivery systems that are a part of Medicare Part D are not eligible for competitive bidding under the Part B. And we are going to continue to gauge in CMS to really talk about the benefits of our differentiated Omnipod 5 technology and how we improve care for people with diabetes.

Operator: Your next question comes from the line of Richard Newitter from Truist Securities.

Richard Samuel Newitter: Congrats on the quarter. Wondering if you could just comment a little bit on the — how the T2 indication is potentially allowing you to better compete for type 2 patients versus the competition? And how much of the momentum you’re seeing there from last quarter or the last few quarters, is that indication versus converting to marketing initiatives direct to patients?

Ashley A. McEvoy: Thank you, Richard, and thanks for your interest in PODD. I appreciate you guys joining. I’m going to turn it to Eric.

Eric Benjamin: Richard, this is Eric. Maybe just some color on type 2 of the indication and competition. First, the indication is really helping us build the market as first movers in type 2, and we have the SECURE-T2D study, which shows 0.8 A1c reduction on average and significant A1c reduction up to 2% for those with A1c over 9. And 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 they’re bringing the power of that evidence to folks with whom we have strong relationships, and we’re activating more prescribers, getting them comfortable prescribing AID. As it relates to competition, Omnipod is just so differentiated and so simple to use, that it gives us some strength, in addition to that body of evidence, that help us compete in the market.

In addition to the strength of technology, we’re also unique from an access perspective. We are available on a pay-as-you-go capacity, co-pays’s typically about $1 a day, right where they get there and so on. And 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 Omnipod.

Operator: Your next question comes from the line of Issie Kirby from Redburn Atlantic.

Issie Kirby: On type 2, I’m sorry if I missed this, but did you break out the proportion of new starts in the U.S. coming from type 2? I think that’s usually something we’ve had from you guys. And then just following 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 ENDO space? And then what are you seeing in terms of direct-to-consumer leads as well?

Ashley A. McEvoy: Thank you, Issie, for the question. Let me kind of first start with our — the strength in our U.S. 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 #1 most prescribed, the #1 most requested AID and #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 as endorsed by the ADA on standards of care using AID therapy as a first line of therapy. And we’re — I like to say, taking the science to the street of making sure we get 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 in 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 guidelines. And as we shared, the new customer starts coming from type 2 in the United States are approximately about 1/3 of our new customer starts in the United States.

Operator: Your next question comes from the line of Matt Taylor from Jefferies.

Matthew Charles Taylor: Had a related question on your last comment there. You talked about earlier on this call about 25,000 prescribers, I think. And it sounds like the sales force expansion has been relatively seamless. I was just thinking, Dexcom, I think, calls out 100,000 prescribers in the U.S. Do you think that we’ll 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 “same-store growth”?

Ashley A. McEvoy: Thank you for the question, and I welcome you to come when you hear our whole story at Investor Day at Acton on November 20. But we — I mean, we’re seeing really strong growth on our core, where we also have very low penetration still 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 greenfield in the type 2 community. The continuous glucose monitor sensors are out there first, driving broad adoption in the insulin-using and non-insulin-using patients, but we have a lot of opportunities to drive continual growth. It’s not going to be a linear line per se, I would say, in 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 covering up on nearly 1 year of really talking this with the clinicians and patient communities. So stay tuned for more as we talk about it on November 20.

Operator: Your next question comes from the line of Bill Plovanic from Canaccord Genuity.

William John Plovanic: Actually, I think when you first started, there was some fear about operating margin expansion and maybe some of the reinvestments you talked about. And it’s interesting, you had significant leverage, especially on the SG&A 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 and you’ve not yet just implemented it? And how should we think about that kind of going forward?

Ashley A. McEvoy: Yes. Thanks for the question, but I would — I mean I would say our strategies are intact. Our type 1 — we’re leading in type1, we’re creating the market in type 2. We’re growing profitably in international markets, and we’re advancing our innovation agenda and supply chain. I mean when you — if you were to ask me areas that I think that we can move faster and to deepen our advantage and where we plan to invest additional capital, I would call out four areas. The first is accelerating the pace of innovation across algorithms, sensor integration, our next-generation architecture for like hybrid closed loop and our fully closed loop, 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 to scientific evidence to the health care professionals and patients and continuing to improve what we think is really superior access and affordability in our markets.

The third that we’re looking to invest more is our commercial excellence and our commercial engine and demand generation. I talked 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 really serve the next leg of demand and increase our cost advantages.

Operator: Your next question comes from the line of Matthew O’Brien from Piper Sandler.

Matthew Oliver O’Brien: I wanted to ask about that comment on an acceleration. I think Ana Maria mentioned in competitive conversions in the quarter. Can you just talk a little bit about what drove that? And is that the commentary about MDI acceleration of record new patient numbers in Q2, is that excluding the new competitive conversions? So on its own MDI would have accelerated and then the competitive conversions are on top of that?

Ashley A. McEvoy: Go ahead, Eric.

Eric Benjamin: Yes. So let me deal with the numbers first. So yes, MDI accelerated and competitive conversions accelerated, and both type 1 and type 2 grew year-over-year and sequentially. In terms of what’s driving that, we think it’s a couple of things. First, we’ve delivered impactful innovation. Omnipod 5 is safe, effective, understood to be really easy to use. And we’ve done a great job making it acceptable. So that pay-as-you-go access with no commitment at low co-pay, makes it easy for folks to get started with that great technology. Additionally, our team is doing a great job executing in the field and serving customers. And it’s really those three things: innovation, access, execution and markets.

Operator: Your next question comes from the line of Danielle Antalffy from UBS.

Danielle Joy Antalffy: Congrats on a really strong quarter here. I just wanted to follow up on the 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? ENDOs have been adopting pumps for a very long time, primary care — they’re dealing with a lot of other things besides their — in addition to their diabetic patients. So just curious about how heavy the lift is in primary care versus ENDO and sort of how you guys are adapting to that?

Ashley A. McEvoy: Thank you, Danielle, for the question. I would say a couple of things. One, it really — you asked about ENDOs and high-prescribing PCPs in the U.S. 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, who perhaps may have — be fearful of complex what they view to be complex technology. And because of that, 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 the clinical outcomes of reducing A1cs and improving time and range and also slowing down the weight gain and slowing down loads for hypoglycemia, and you can use with GLP-1.

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 reasons why it’s starting to get early traction. And on that, Eric, I’ll just see if you have anything to add.

Eric Benjamin: Maybe just briefly, Danielle. I think what we see is that those who’ve been prescribing AID is 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 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.

Operator: Your next question comes from the line of Jayson Bedford from Raymond James.

Jayson Tyler Bedford: And congrats on the progress here. Just on the international business, big step-up sequentially, growth accelerated off of an already high level. It didn’t sound like it, but was there a notable contribution from any new geographies? And just one other quick one. Thinking of the volume price mix, where are you in terms of 05 adoption within your international base?

Ashley A. McEvoy: Thank you for the question, Jayson. I’ll ask Ana, you can answer now.

Ana Maria Chadwick: Absolutely. Yes, 39% great growth. What we’re seeing is Omnipod 5 conversions are now up to about 50% of our total. That’s a rapid growth from last quarter, which was about 40%. So that price/mix 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 mix realization in the low double digits. So 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 a couple of years, and the new one is just ramping up. So durability of the growth in international is here with us.

Operator: Your next question comes from the line of Matt Miksic from Barclays.

Matthew Stephan Miksic: Maybe just a follow-up on the last question on really impressive overseas growth. If you could talk maybe a little bit about the mix effect of having such a strong outside the U.S. geographical contribution down the P&L, if there is any notable differences in the way that kind of drives the P&L? And then also the way that you scale into some of these geographies in addition to kind of the mix to Omnipod 5, is there a — I guess a bit of a follow-up to the last question, was there kind of a step-up in, I don’t know, new distributorships or significant steps that we can build off of, but that maybe kind of feed back into your views in the back half and how you’re thinking about guidance?

Ashley A. McEvoy: Yes. I’ll — great question. I’ll start and maybe others here will add. But as we’ve talked about before, we have these layers of built-in growth. So we started U.K. and Germany over 2 years ago, then we went with France and Netherlands, and now we’ve expanded that to 9 more markets. Having said that, key thing to point out is the launch of Omnipod gives us 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 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 that has converted from DASH to Omnipod 5. And this is in addition to all the MDI conversions that we’re getting. I hope that gives you a flavor of our durable growth in international.

Ana Maria Chadwick: Yes. The only thing I would add to that, Matt, is to say it’s really consistent with the strategy to build the market and to really be the market maker and the team working in the U.K. to establish nice guidelines to really get AID therapy as a standard of care or working with the French government where we got full reimbursement. And so those market access and development levers allow a differentiated technology like Omnipod 5 to really come in and drive sound penetration, earning and commanding a price premium as we elevate the transition, not only just from our DASH users but from really converting MDI users over to the latest technology of Omnipod 5. And we have launched — as Ana mentioned, we launched in Italy this year, in Nordics and Australia, Belgium, Switzerland, Canada.

They haven’t had material impact to date. A lot of — the majority of our growth of OUS is coming from our 3 core markets. So we anticipate them to start to contribute in the next upcoming quarters.

Operator: Your next question comes from the line of Chris Pasquale from Nephron Research.

Unidentified Analyst: This is Carol on for Chris. I just wanted to follow up on the gross margins. It looked like you would have exceeded 71% in the first half if you exclude the inventory charge. And your outlook on tariffs has improved by about 30 bps. 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 kind of show for any underlying improvement there?

Ashley A. McEvoy: Great question. All the things you mentioned are spot on. 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 30 basis points. 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%. We — this represents 120 basis points. This guide represents 120 basis points expansion on a year-over-year basis. So stay tuned, we’ll continue to update. But we feel we’re in a very good position to deliver the 71%.

Operator: And this concludes our question-and-answer session. I will now turn the conference back to Ashley McEvoy.

Ashley A. McEvoy: Thank you. Well, I appreciate everyone enjoying. I’m clearly excited about the opportunity that we have scale this remarkable business and create value for our shareholders but also importantly, improve the lives familiar to 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 Insulet for unwavering dedication for people with diabetes and a remarkable quarter. Thank you.

Operator: Ladies & gentlemen, this concludes today’s conference. Thank you for your participation, and have a wonderful day. You may now disconnect.