Conference Transcript - MMED 2026-09-23

Speaker 4

Excellent. Welcome, everybody. Day two of the London Healthcare Conference for Bank of America. I'm Dan Lukas, the local healthcare specialist based in New York. I'm very pleased today to have Minimed with me. We have Q Dilara, Chief Executive Officer, and Chad Spooner, Chief Financial Officer, with me up here for a five-cent job. So with that, let me kick off. So maybe first, you know, just touching on, you know, post, you know, the, you know, post the initial spinoff, you know, Minimed is entering a new phase with recent innovation, reaching patients in a broader portfolio, moving increasingly towards commercialization. You know, what's changed the most fundamentally? Why should investors view Minimed as a growth quality today? Maybe we'll start.

Que Dallara, CEO

Dan, thanks for having us. What's really fundamentally changed, I would say, is really two things. One is we've really kicked it up a gear. And you can see that in our last 12 quarters of consecutive quarters of high single-digit, low-adulted growth, we've pushed a lot of the pipeline that we committed to with the IPO to the left, so ahead of schedule. and I think that's a lot more visible. We've been a public company, we're able to talk about it a bit more now. So I think those two things have been pronounced. You know, this market is huge. It's 19 billion, growing double digit. So we're playing in a very attractive space. Incredible pipeline that we're executing on right now. We've seen US, for example, accelerate international business. it continues to perform consistently. And so when you take all those elements together, we're not a mature business in a middling market where we've got an unbelievable pipeline and a growth market. And really what you're looking at is the next phase of growth for Miniman.

Speaker 4

And you've seen an acceleration in the US business. So just maybe kind of touching on that, it began with the launch of Simplera Sync sensor and you know, you've launched now instinct, which is the 15 day CGM from Abbott, you know, you'll have flex coming, which is a new durable pump. It, you know, it launched with simpler a few months ago, and with instant last month, how do investors think about the durability of the growth? I think that's been a big theme within the MedTech world is not just acceleration, but durability of that.

Que Dallara, CEO

I think it's a, it's a great question and how you how you phrased You know, if we take a step back, the way I think about it is it's what you're seeing in the U.S. is really an early step in a cascade of launches that are happening. And you kind of wrote down the list. And so it's not a single product. And so we just launched Simplera Sync with Flex really for five weeks of Q1. So we're just really in the early innings. And so as we execute on the pipeline, and certainly as we roll this out around the world, that's what's really fueling the growth and, you know, confidence in the future.

Speaker 4

You've called it, I believe you've called it third generation of mini-vads. So maybe you can, you know, you talk about how you brought together smart MDI, durable pumps, patch pumps, soon to come, central choice, one app, care link. I mean, there's a lot that you've sort of brought together in that ecosystem. You know, why is it so important to have all those pieces within, you know, the single ecosystem rather than a standalone cost?

Que Dallara, CEO

Look, I think when you list all the products, it can often sound like a laundry list. And so I think maybe I can help with a governing thought of there are really two axioms, like why we have the portfolio we have. There are two fundamental things that are true today and will be true in the future. And the first one is the fact that not everyone who has diabetes wants the same thing. People have different lifestyles. They have different needs. They have different things they respond to that fit into their lives. And so we don't believe in force fitting people with diabetes to one single product. We think we need to offer choice for the thing that fits their lives. So that's the first thing. That's not going to change because it's different strokes with different folks. You know, and the second one is that the direction of travel for where the industry is going is simplification. People want simply user experience, they want, you know, diabetes is hard enough, let alone making technology yet another burden someone has to deal with. So the user experience needs to be easier, more of the automation needs to happen in the background, less burden on the part of the patient. Those things are true today, and they'll be true tomorrow. So in the context of that, when you think about the portfolio that we offer, we are really providing a very compelling value proposition in that you don't need to leave Minimed to pick a therapy that works with you. We have three different dosing hardware options, whether that's a smart pen, you don't want to be on a pump at all, a durable pump for when you want to disconnect and a patch bomb that we have in development. And then we have one single app that drives all of that. We have one support phone number, one algorithm, one care link, you know, healthcare portal for patients and providers. And so you don't need to leave minimed if you want to pick any of those options. And so that's fundamentally the portfolio we have. It allows us to address, you know, pretty much everybody in type one and allow them to have an incredible experience with less burden and the great outcomes that we're known for.

Speaker 4

And maybe sort of shifting to some of the different products within your portfolio. So the Flex launch, you know, what genuinely, you know, launched Durable Pump, the first major pump hardware and software refresh in more than a decade.

Que Dallara, CEO

What are the early indicators telling you about the ability for this to expand, you know, the U.S. market well i've been in the field a lot i mean qualitatively um it's a great product we're very proud to launch it um it's a massive upgrade as you said first one in about a decade and it's not just the hardware it's also the software and people are saying this is very easy to use uh they're actually very surprised at how simple it is the software is very intuitive um and we're getting invited in with a lot of accounts to share with them to teach-ins and share within the product So being out in the field a lot, this is very much resonating. And then when you combine that with the data we shared, the metrics we shared, the last earnings call, with over 20% unit growth in the U.S., just with the five weeks and just with Simplera, we didn't even have instinct in Q1, the reception has been very positive. and you know fit been a lot of buzz around it's your next generation you know patch pump um i believe you've you've said the full launch is expected um in the summer of next year how should investors think about fit as more than simply another entrant in the patch category we don't think it's just another entrant we think it's a truly differentiated patch system that we're bringing to market and we've worked very hard on this and i think if you look at um the patch pumps clearly there's a secular interest from especially from people on MBI who are looking at pump therapy that they perceive it as a simpler device again the direction of travel being simplicity of the system but that simplicity isn't just not having tubing it's the overall experience from how you're onboarded how the algorithm works the software experience etc and so when we have done our own research, the feedback we hear is really three fundamental gaps in what's available today and what is available that we see in the market from others. One is the size of the reservoir. And that's important, especially for adults and people on type 2 that have high insulin needs. And I believe today we're really the only ones introducing a 300 unit reservoir in our PAP system. Second part that people often ask for is they ask for longer wear. You see that trend in CGM. And so our intent is to have an up to seven days of wear device. And so for kids, that means they get the full seven days. For an adult, maybe five days. And if you're a type 2 patient, you have three or four days, something along those lines. So that's important. And the reason why that matters is because you're inserting yourself less if it lasts longer. And that's important because it means, you know, you run out of real estate on your body for insertions. You have more time between insertions for the body to hear at those sites. And then lastly, people want, you know, the wonderful algorithm that we have, our automation, our meal detection technology, our order corrections every five minutes in a patch form factor. So we're going to be able to offer that to the market. We think that's truly differentiated in terms of, you know, compared to what we've seen in the marketplace.

Speaker 4

And in terms of manufacturing and, you know, your capacity, you've talked about 20,000 patients at launch, you're already preparing additional capacity beyond that, what gives you confidence in the ability to launch and scale the platform?

Que Dallara, CEO

By doing it. And we can put a lot of things on paper, but fundamentally, we have to demonstrate that we can hit the output targets we want and we're hitting the yields and the cost but one of the reasons why our patch pumps have been very difficult is not necessarily technically doing it although that is complicated but it's really scaling up manufacturing we're making a sterile product so you have to be very good at sterilization you have to be good at high volume manufacturing those two things we have a lot of experience doing with our consumables and our um cgm um and so we're translating that into um the patch um product but at the end of the day we have to demonstrate this and so the lines are up we're running all through the pipes and that's

Speaker 4

what gives us confidence that we'll be ready at launch with at least 20 000 patients and you know thinking about the the interplay and coexistence of flex and fit patch pumps have been you know outgrowing durable pumps over the last several years. Many patients, however, do appreciate and like, you know, the patch pump, the smaller on-body footprint and, you know, the disconnectability. Why can both flex and fit grow?

Que Dallara, CEO

Well, again, it's different strokes with different folks. So you have people who really, a million and a half people globally today who are on durable pumps. They don't mind the tubing. In fact, the tubing is, as you say, it's a smaller one euro coin type profile on your body. People prefer that. They can wear the pump wherever they want and they can disconnect from it for different activities like swimming or you want to take a shower or something like that. So there's a lot of reasons why people pick that. A million and a half people have picked that. So I don't think that's going away. I think a lot more new to pump therapy, prefer the patch. We see that for sure. and and so we want to offer both and so honestly the more choices there are the more options that Minimet has to grow and address a bigger part of the market.

Speaker 4

So maybe you know shifting a little bit to Vivera and the algorithm differentiation you talked about how important software is you know Vivera is Minimet's third generation fully closed loop algorithm for type one type two you know, the U.S. pivotal trial is fully enrolled. I believe you're intending to launch sometime in the second half of calendar 27 on both flex and fit. So, you know, how do you think Vivera could change the overall AID experience?

Que Dallara, CEO

Vivera is not just another algorithm. It's been a dream that we've had since the first automated insulin delivery system came to market with 670G about 10 years ago. And, you know, our belief is that it's going to change the game because one of the biggest, when you talk to someone with type 1, with a burden of diabetes management, they have to dose a drug every day, 24 by 7, it's no break. The biggest complaint they have is to take away the mental burden from having to do meal balling, knowing, you know, It's not lunchtime yet. You don't even know what you're having for lunch. How do you know how much is in the panini you're going to have? And being able to remember that and constantly making those mental adjustments. So removing that is going to be a very big deal in terms of reducing the burden of diabetes management. And so that's what we're trying to do with Avera. We will, what we're studying is removing completely. You're not making any meal announcements. You're not saying, I'm eating now. You're not putting an emoji in. You're not doing anything. No input whatsoever. and still being able to achieve for type 1 above 70% time in range and for type 2, you know, possibly higher. So that's ultimately the goal because, you know, today if you think about what AID is in the market, people want freedom from disruption. They don't want alarms and alerts. They don't want micromanagement. They want freedom from micromanagement because most of these devices are telling the patient what to do all the time. They want something that works in the background. So that's our goal with Vivera. The easier we can make AID, and the reason why we're very excited, is that the bigger the market will be, the more people will be willing to consider AID and pump therapy. If it just works for them in the background, all they have to do is put insulin in the pump and wear it. And getting on therapy just needs total daily dose without all of the programming and rigmarole that needs to go into it today. So this is a big game changer. It isn't just another algorithm with just a little better performance. It is fundamentally like a self-driving car where you're removing the driver from it.

Speaker 4

So you mentioned, you know, the time and range in type ones above 70 percent. I think it was 74 percent.

Que Dallara, CEO

You know, what are the clinical and commercial significance of maintaining those strong outcomes while reducing the growth? that's what people want people don't want to have to choose and make a trade-off between great outcomes and convenience or simplicity you want both why why should we deny someone with diabetes everyone that has diabetes deserves a system that delivers the best health outcomes that is easily used and so that's why it's it's clinically important isn't just a you know convenience feature. And so our goal is to really deliver both. We're not just trying to remove neobolucine in a safe way. We're trying to drive better outcomes without the need for as much input for the reasons I've described.

Speaker 4

So that's what we're saying. And so maybe just thinking about the algorithmic architecture and how that differs, right? You're mentioning this isn't just another algorithm. So you took a differentiated architectural approach to AID than many of your competitors? How is the architecture different? And why does that matter? Both outcomes and patient burn?

Que Dallara, CEO

Look, one of the advantages of Minimed is that we have CGM data, and we have insulin data. And so from the very beginning, the holy grail and the dream of the artificial pancreas was to ultimately get to where we think the variable will be. And so we always try to build a system that, try to mimic what a pancreas does. So how does a pancreas work? A pancreas magically knows how much you're eating and knows how much insulin to secrete in order to convert that to energy. It's just magic how it works. And so that's what we try to do. So that's why you have this concept of meal detection technology that every five minutes we're doing a forecast of where we think the patient's going to be in terms of their glucose level and as a result of that we provide a recommendation from dosing and we make that automatic. It's the only system on the market with meal detection technology so in other words if you forget to bolus which we always recommend you do. If you forget to bolus or you miscalculate how many carbs you have, there's a lot of forgiveness in the system. So with Vivera, we're taking that a step further to remove the bolusing function completely. And so that's the experience of the last 10 years. And it's due to the fact that we have the full stack of all the components of AID that allows us to do that. So architecturally, it's very sophisticated. The other thing I'll mention is that we're not just trying to solve for removing meal bolusing. What we see in the market are really two sort of ends of the spectrum of people with diabetes. On one hand, you've got people who don't want to have it and they are teenagers. They don't want to do anything. I have a teenager, can't get her to do anything. So getting them to bolus is probably impossible. So we want a system where it will work for those people who don't want to be engaged whatsoever. But on the other end of the spectrum, you're going to have people who care very much about their diabetes and their glucose control. And so they're going to be super conscientious about it. And so for those people, our algorithm will allow for optional bolusing because they don't want just 70%. They want 80%, 90% timing range. So the algorithm can accommodate both. And the reality is most people will be somewhere in between. Some days they won't do any bolusing. Some days they might. And so our system can really, it's like a dial. It's not just an on and off switch. It's not just a simplification. It actually accommodates users. We're going to be removing meal policy, getting you at least 70%. If you want more, you want to engage, the algorithm can handle that as well. That's what's special about.

Speaker 4

I have a seven to five-year-old and they don't listen up. So maybe shifting to type twos and market expansion there. So type two patients, I believe we're somewhere around 40% of your U.S. new starts. What have you learned about the products and support these patients need and seek?

Que Dallara, CEO

We've had type 2 laboring for a long time. So we understand the profile. And I think with a lot of type 2s, they want it to be simple. I'm generalizing. So I call it a front advantage. But oftentimes, just on average, don't necessarily want to engage as much as type 1s. Type 1s start when they're kids. They kind of know it's very important to manage their diabetes. So they want it to be simple. And so I think the two drivers for keeping type 2s on therapy and being successful really starts with product market fit. You want a product that suits type 2. It's got to be simple to use. Usually should have a larger reservoir. And the automation is working in the background. And so our system provides that. Flex has a 300-unit reservoir for that reason. It's got great automation. patient's got the meal detection technology. The app is super simple to use. So that's one piece. The second piece is the product itself is not enough. You really do need to support the patient. And so for many, many years, really decades, we've always had an onboarding program called Start Right. And the critical period is between when you start to the first six months. And we have regular check-ins to make sure that patients can get on therapy very quickly, that they're doing well. And if there's any troubleshooting needed, we can handle that. And then post six months, we have a program called Stay Right. And again, it's strategic touch points, education, encouragement, things that help the patient stay on therapy and be successful. So it's really the combination of those two things that honestly, we've been doing for years that really help drive retention in type 2s.

Speaker 4

So it's good that you mentioned retention. So one of your competitors has recently discussed execution challenges and retention in its own type two business. What are you seeing in terms of your retention trends what gives you confidence in how your approach is differentiated?

Que Dallara, CEO

I don't know if you want to answer that, Chad.

Chad Spooner, CFO

So, you know, we've actually seen from a type two perspective, we've had type two for a while and the trend has actually not gotten worse. It's always a little bit more than type ones. That's just across most of the business, but we've seen a slight improvement actually in our retention rates and type twos over the last few quarters. so we haven't seen it go in the other direction.

Speaker 4

What would you say is how your approach is differentiated maybe versus your peers on that front?

Que Dallara, CEO

It just comes down to what I just mentioned. You want the product to fit the need of the patient and not force fit, say, a smaller reservoir for patients that have high insulin needs, right? And so that's what our 780G had a 300-unit reservoir, Flex has a 300-unit reservoir, Fit will have a 300-year reservoir for that reason. We published something in Diabetes Care earlier this year with type 2s that didn't bolus. Again, we recommend bolusing. And they were getting about 80% of the time in range. So the algorithm is very effective in working the background and reducing the amount of engagements that patients have to do. So that's also important for type 2. So product market fit is important. And then the programs, like I mentioned, people, you know, can get sick and they get into challenges. And that's why we have a clinical field team. We have a tech support team that can handle troubleshooting 24 by 7, 26 languages for that reason. That helps drive retention because people feel supported. It's not enough just to have a device.

Speaker 4

So you sort of mentioned, you know, 26 languages, but just the broad commercial scale. You have thousands of commercial and service professionals, you're in 80 something countries. How does that infrastructure strengthen the opportunity behind the overall portfolio?

Que Dallara, CEO

You know, it's hard to do multiple things at the same time really well. And the great news is we've got an unbelievable commercial presence in 80 countries. We have a lot of scale. And at this moment in the company's history, we have an incredible pipeline that is coming online right now. As you mentioned, you listed a long list of things. And so it really is this rolling thunder that we can put into our channels and into our sales team. It's honestly the richest portfolio in the company's history. We're ready to go. We're not trying to do that in addition to adding more salespeople in markets that we're trying to expand into. We're already in those places. We have scaled presence. It's a matter of executing well on the launches as these new products get clearance and approvals.

Speaker 4

And maybe we'll segment sort of US strategy versus OUS. And with the US, you know, the pharmacy strategy, you know, you're accredited DME supplier and licensed pharmacy, many of your products like CGM, consumables, 780G, already go through that channel. You know, how should investors think about the pharmacy strategy for Miniman?

Que Dallara, CEO

We think pharmacy is a huge opportunity. It really does expand access and certainly makes things convenient for patients and providers. So we think of it as a market access expansion, not a replacement of DME. A lot of health plans in the U.S. won't allow pharmacy coverage, even if it's on the formulary, for things like durable pumps, for example. So DME is going to be important. So we see pharmacy as a huge, incredible expansion of access. And we're a licensed pharmacy. And we have products going through pharmacy today. We have our CGMs going through pharmacy at very comparable prices to where DME is. We have consumables going through pharmacy. MiniMed Go with InPen goes through pharmacy. And the intent is fit will go through pharmacy as well. So we don't have to build new pharmacy capabilities. We have that today. And the great thing about being a DME provider and a pharmacy provider is that the physician can write an electronic script, send it directly to us. We can dispense the product and ship direct to the patient. And again, it goes back to, Dan, your comments around retention. It allows us to trace the patient directly from the beginning of the lead all the way until they're on therapy and successful with our channel approach in DME and pharmacy.

Speaker 4

Understood. And then maybe shifting to sort of the OUS growth sustainability, you know, it's been a low double digit underlying growth story. It's 70% of revenue. I think, frankly, it's an underappreciated part of the story. But what makes that position durable as competition increases, you know, and flex begins at European law?

Que Dallara, CEO

We have a very strong commercial capability, and we know how different health systems work in different markets. Some are tender markets, some are insurance markets like Germany, and you have national formularies as well. So we're very capable from a regulatory and a reimbursement standpoint in those markets. We already have people on the ground. We know the local providers, the local communities, et cetera, we're already set up. So it's really a matter of launching new products in there. I think there's a bit of perhaps a misconception that we don't have any competition, and that's certainly not true. If you look at the top, say, the top 10 markets in Europe, These are contested markets. We see competition all day long in scale competition and we're holding our own.

Speaker 4

And I think with new sensors, the product pipeline that's coming, we expect to continue the performance that you've seen in prior quarters and years. right um so maybe you know shifting a little bit to just sort of the the financial and you know growth and profitability you know aspects um you know you've been invested when you are investing behind flex fit their sensors there's a lot going on we've talked a lot about it um all while targeting profitability expansion so maybe for you chad um you know structurally how can the company invest appropriately for growth and still generate operating leverage so we think that the actual investment growth is what's driving the profitability.

Chad Spooner, CFO

So as we've invested in all the new products, that's what's driving the growth of the business. And as you see that growth happening, we've been able to do that while maintaining a very disciplined control around our OPEX, our sales force, and our R&D costs. You know, Q has mentioned that we're already in 80 countries around the world. So we already have an infrastructure. So as our business grows with these new products that we've invested in, we're seeing that leverage because we don't have to grow our sales force the same way. And the same thing happens within R&D. You know, we do everything across a common platform. And so you'll see a lot of us leveraging different products and what builds them up, the components within our R&D. So as we've expanded our business and we've launched five new products, we've completely refreshed our portfolio and able to do that while delivering operating leverage. So we think that that investment is driving the top line of whether it's products or the sales force and that we're getting operating leverage from that year in, year out.

Speaker 4

Understood. And I think that partly draws on the fact that the technology and commercial platforms across, you know, Go, Flex, Fit, Bavar, et cetera, share all that same sort of common architecture. We came back to that point. You know, how should we think about the financial leverage that is coming from the common architecture?

Chad Spooner, CFO

Yeah, it's actually been one of the things we've really benefited from. So if you take anywhere from 780G to Flex to what we're putting into Fit, it's very common, whether it's the reservoirs, whether it's the electronics, you know, whether it's infusion sets, we use that common platform across our products. So we're not redeveloping things, we're not having to invest in new capex. So there's really a huge leverage effect of using that common platform. We have a common app as Q talked about across all three of our insulin dosing devices. So it's by doing these products that we have that have commonality between them, we're now reinventing the wheel every time.

Speaker 4

And And maybe kind of thinking about the economics across the ecosystem, you know, CGM consumables are more than 80% of revenue. CGM attachment reached 69%, I believe, in the first quarter. You know, how does expanding the pump install base improve the overall quality and visibility of the financial model?

Chad Spooner, CFO

You know, we feel that we've got a unique model, right? Our ecosystem allows us to grow revenue from install base growth and from attachment rate, which is a unique thing in this space. So as we add to our installed base, everyone who comes on AID also gets one of our CGMs so they get the benefit of AID. And with that, our attachment rate grows. So we think that's a compounding effect of getting someone in our IV and increasing our attachment rate. We get much more durable revenue and our share of wallet grows as well as just not the number of patients, but the share of their pocket grows as well. So it's what we think is really a great compounding effect of having the ability to grow that attachment rate. And as you look at our portfolio, we do have some people in legacy systems. And as they convert over, you'll continue to continue to see the attachment grow, and that'll continue to drive growth as well.

Speaker 4

When you think about the cash profile, you know, reported cash flow currently reflects the separation and standalone build-out activity. How should we just think about, you know, the underlying cash generation as you exit the transition services and the business scales?

Chad Spooner, CFO

Yeah. So obviously we believe that while we're going through the separation, the cash used there is an indicative of a go-forward business, right? You're going to have things to step up, set up the business, IT structures, and other things related to the TSA. And as we come off of those, you're going to see a business that's generating not only more profitability, but also much more stronger free cash flow generation. So we've seen it already in terms of there's certain items that we've used and we're really well capitalized, right? And so we're in a good, very good position with over 200 million of cash at the end of last quarter and a credit line of over half a billion dollars to be able to afford us, you know, not only through this, but for the future and beyond. So we're very optimistic. We believe that we're going to be in a great position as we exit the TSAs with Medtronic to continue to grow our cash flow.

Speaker 4

And, you know, there's a lot going on from an innovation perspective, scaling up your commercial platforms, et cetera. You know, given the broad internal roadmap, how are you prioritizing capital among manufacturing, pipeline acceleration, separation work, potential external opportunities?

Chad Spooner, CFO

Sure. So capital allocation always goes to our internal growth first. We think that that we're getting the best return out of focus on internal growth. And you can see that through our pipeline, right? And so really investing in our portfolio is the first place we're going. So whether it's for the engineering to develop it, or for the capital to develop for fit, for example, for the capex, we need to develop the products and put them on the market. So that's the first. The second thing that we're spending the capital on is separation. So we definitely have focus over the next two years to make sure that we stand up the business with IT systems and other pieces and capital will go there. And then the third element will be we've always looked opportunistically at if there's small technology items that could really add to our intensive insulin portfolio, there's always things whether it's software related hardware that could add to our journey because we're not done with our portfolio right now. So the third element of where capital allocation goes.

Speaker 4

And maybe sort of stepping back 30,000 foot view to both of you, what would you say is the most underappreciated part of the story?

Que Dallara, CEO

I think you mentioned one, which is just our OUS presence. We've been in those markets for a very long time. We believe the growth is durable. The pipeline is coming, so we feel very excited by it. And I think in some of our conversations, that's just not as well understood in those markets and the markets are complex, but the good news is we know how to, we know how to operate in them. I think that's one, what would you say?

Chad Spooner, CFO

I would reinforce the whole fact of our installed, you know, our footprint across the world and the ability to generate, you know, operating leverage. So we talked about it and we explained it quite a bit, but the business really has the infrastructure that we need to really profit upon the growth that we're getting in a very, in a very strong way. So that's one thing that, you know, we continue to explain that we feel very confident we've delivered it for the last three years, we'll continue for the future.

Que Dallara, CEO

And I think, you know, a lot of the maybe wait and see mode or the skepticism is really dying down from certainly when we did the IPO, we showed them the roadmap. Like it's happening right now. And so I think, as putting runs on the board, and we're showing up, pushing the pipeline to the left, I think, you know, I think it's changing minds in terms of what people may have received, you know, six months ago even. Great.

Speaker 4

Any questions in the audience?

Speaker 1

I'd be interested in what your one month retention rate is in your type 2 patients, you know, as a KPI. And maybe you can follow that on is if we were to track or maybe your next layer of KPIs, obviously we can see sales and margins and there's cashbooks going through. What are the things operationally that we should be or you are focused on? Is it customer satisfaction? Is it, you know, more clinical measure? Or give me a sense of maybe the KPIs that we should be looking out for.

Que Dallara, CEO

We haven't published any KPIs in regards, but internally, just practically speaking, it's a bit like if you were to, you know, buy a new car. I mean, you need to make sure you can run it and drive it and so forth. So it's no different than if you're going to go on pump therapy. it's new if you've used to being used to using injections or you you know you just got diagnosed with diabetes there's a lot to learn so we that's why we have a clinical team that works very hard to make sure those patients are successful get education around the therapy they know how to use it it's working for them if they hit any roadblocks you know we help them troubleshoot so that's really the first 30 days is all about that. And generally when people get through that and they're successful, they'll stay on therapy. So it just, it just, it's different for, you know, some people it's very super simple. It's easy and for others, they need more help.

Chad Spooner, CFO

And from another KPI standpoint, I think what we try to do is we publish two operational KPIs, new pump sold and CGM attachment rate. And we think that those are the most indicative to the health and the growth of the company. Because every time we sell a new pump, right to a customer, we think that's going to really show the top line growth we're getting. And as we talked about the compounding effect of the CGM attachment rate is why we give those two metrics because that really will talk to the health of the continued growth of the company. Sure.

Speaker 1

I guess I'm kind of interested in the causal factors which are driving those two metrics, which we can see and you will report tracking that um and i guess you know i don't need the precise numbers but just a sense that they're all uh flashing green at the moment or to the extent that some will be a bit yellow and that that you you're aware of it and actually you think there's no reason that these all won't be green for the next 12 to 24 months and therefore we're going to see all those other metrics go well because the the story sounds really good right the execution piece there's some you know We've got to see it happening. And I guess I wanted a sense of those leading indicators, like the things which means that those things will drive, all flashing kind of green, that will give us more confidence that it's happening.

Chad Spooner, CFO

Well, one of the things I think you could look at is our pipeline acceleration, right? And so what drives CGM attachment rate is getting more patients on the new products that are on AID. So when you think of Flex and you think in the future of Fit, the success of those programs are going to drive more AID adoption, which are going to help our CGM attachment rate, and they're going to help our NPS. So really the pipeline, the strength of our pipeline, the execution of it is going to help both those metrics. That's kind of the predecessor to whether or not, if we're not successful in those launches, the execution, NPS will continue to grow, and our CGM tax rate will continue to grow either.

Que Dallara, CEO

One of the reasons why, I'm not trying to dodge the question at all. I think one of the reasons why it's very hard to be precise is that you don't know if people have retreated. because and so we look at a bunch of things did they log in did they upload their care link did they order supply sometimes they don't order supply because they forget um and you know i i'm often behind on my medication so you know so it's just things like that doesn't mean they treated they just forgot so the action there is when we take an early signal we then engage with the patient hey did you forget to order you know why don't you put this on auto reorder for example So that's kind of a bit of the, you know, nitty gritty of how we manage to see through that. But it's hard to report a pure attrition number for that reason, because they may have plenty of supplies in their cupboard and they don't feel like they need to water. And so they'll work down the supplies. We have a lot of patients with our, when we released the new CGMs, they had a lot of guardian people in their cupboard. So they're like, okay, I don't want to spend money on the new stuff yet. I'll burn down my stock and then I'll get the new thing. So they didn't churn, but even if we didn't see them order that quarter. So that's why it's hard to be accurate about attrition metrics.

Speaker 1

Maybe if we have time, maybe ask a kind of KPI question on completely the other side. So one of the theories of spins, obviously, is that you get to control your own destiny. Your capital allocation is better. you can spend it on where you want you're more focused all of these great things that we've seen and you know spins they get that right they can work um one of the causal things though is also having the right people and people feeling committed to the spin versus old code versus other things that they can do uh so i'd be interested in you know how is potentially your recruitment and retention particularly maybe say um what are those regretted losses are you keeping the ones that you want to keep are you being able to exit out the ones who you don't think you know part of the mission and that organizational resilience piece you know what is the employee turnover in terms of presumably if you've got good employees you're going to be able to execute on all the other metrics then you have happy customers happy customers buy more so I don't know if you can give me a sense absolutely so I think first of all I've been with the business since 2022 too.

Que Dallara, CEO

So going on five years and we've been through a lot of difficulty. We had a warning letter in the US, we recovered, we turned the business around. So the team has been battle tested and it's been through a lot. And we're still together. So the point is, it's a wartime team. So that's one. So we didn't, the other thing you said is oftentimes in a spin, you you've got the turnover of people. I think in our case, we have a pretty intact team through the last number of years as we've, you know, turned the business around, really driven our pipeline and growth. That's intact. So we don't have a brand new management team. Yes, there are new players like Chad, who's been here over a year, but we have a lot of people who've been with business. So that's number one. Number two is because we're on our own as a standalone company, we're able to be more precise around our incentive structures that are more direct to performance. When you're in a big company, you can have all the KPIs you want, but at the end of the day, it's diluted because the company is so big. That's actually more direct. So people can see it. And our philosophy is absolutely distribution of pay for performance. If you perform really well, you can do incredibly well. If you don't, you get a different message. So that's in place. And our regrettable attrition is very low. We are keeping the top talent. The other thing I would say is we're a California-based company. I think we have more flexibility now to actually have much more competitive compensation for the market environment we're in and we're able to track the talent we want, especially with equity in our company that people really believe in the mission. So I think it's all actually very positive being standalone and part of the rationale why the separation from Medtronic is happening.

Speaker 4

Thank you, Chad. Thank you very much. Thank you, everyone.