Good afternoon, ladies and gentlemen and welcome to the Insulet Corporation Second Quarter 2021 Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Deborah Gordon, Vice President and Investor Relations.

Thank you, Dalam. Good afternoon and thank you for joining us for Insulet’s second quarter 2021 earnings call. With me today are Shacey Petrovic, President and Chief Executive Officer and Wayde McMillan, Executive Vice President and Chief Financial Officer. Both the replay of this call and the press release discussing our second quarter 2021 results and full year 2021 guidance will be available on the Investor Relations section of our website. Before we begin, I would like to inform you that certain statements made by Insulet during 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, namely adjusted EBITDA 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 and we believe that they are helpful to investors, analysts and other interested parties as measures of our operating performance from period to period. 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 Shacey.

Thank you, Deb. Good afternoon everyone and thank you for joining us. We have reached the midpoint of the year and continue to deliver solid financial and operational performance, and the underlying fundamentals of our business are strong. We’ve maintained a sharp focus on executing our strategy and driving growth and have sustained momentum across our business. Our outlook is also strong and we are on track to deliver another year of double-digit revenue growth, including meaningful acceleration during the second half. During the second quarter, we achieved 13% revenue growth, including total Omnipod growth of 16%. Our results met our expectations despite a headwind from higher-than-anticipated rebate adjustments in the U.S. pharmacy channel. Absent these, we drove revenue results both in terms of volume growth and mix benefit that exceeded our expectations. We also achieved another quarterly record of U.S. and global Omnipod new customer starts, which gives us great confidence and enthusiasm for Insulet’s future. While our team remains squarely focused on Omnipod 5 clearance efforts, we made terrific progress across each of our strategic imperatives. We expanded coverage and volume growth of Omnipod DASH in the pharmacy, drove continued adoption in the Type 2 market where we are uniquely positioned, once again drove strong MDI conversions and presented compelling clinical data at the ATTD and ADA conferences. These accomplishments demonstrate both the success we’re having unlocking the Type 2 market with our innovative product and business model, and the acceleration we expect in the Type 1 market with the launch of Omnipod 5. We have delivered consistently strong performance in these critical areas without an automated insulin delivery system in the market, which speaks to the power of Omnipod, the unique advantages of our pay-as-you-go business model and the differentiated customer experience we provide. Regarding our Omnipod 5 AID system, we are in the final stages of the FDA review process and are incredibly appreciative of the agency’s diligence and collaboration, particularly given the pandemic workload. While we continue to expect FDA clearance and limited market release in the second half of 2021, we believe Q3 clearance is unlikely and now estimate that both will happen later in the fourth quarter. We remain incredibly excited about what Omnipod 5 will offer the diabetes community. Our market position, which is already strong, will be greatly enhanced by the introduction of Omnipod 5. We are well prepared, have invested in our sales teams, expanded our manufacturing capacity and made great progress securing payer support. Our efforts in these areas will continue as we work through the final stages of the clearance process. We are confident in a successful launch of Omnipod 5, and I will share more on that in a few minutes. I will now speak to each of our strategic imperatives, including expanding access and awareness, delivering consumer-focused innovation, growing our global addressable market and driving operational excellence. Beginning with access and awareness, the global diabetes market is growing rapidly, with millions of people expected to be newly diagnosed this year alone and rapid adoption of CGM among people living with Type 1 diabetes and more recently, Type 2 diabetes. Despite such a large and fast growing market, it remains critically underserved, and awareness of and access to technology remain far too low. We continue to expand access and utilization through the pharmacy, which provides a better customer experience, a more efficient channel for physicians and for Insulet. In the second quarter, we grew Omnipod DASH U.S. covered lives to approximately 80%, a sizable sequential increase. This drove a notable increase of U.S. volume through the pharmacy in Q2. Omnipod DASH continues to be our primary growth driver, with the majority of our new customers across the globe starting on this system. Approximately 80% of our U.S. new customer starts are consistently driven by MDI conversions, and a percentage of our U.S. new customers that were Type 2 during the second quarter remained strong at 35% to 40%, even with the record-setting growth in new customer starts. In the Type 1 segment, historically large numbers of MDI users are adopting technology, which gives us continued confidence that AID will drive a doubling of the pump market in the coming years. We are pleased with our current growth in Type 1, which is a testament to Omnipod’s differentiation. And as we look ahead to Omnipod 5, we expect to be extremely well positioned to accelerate growth in this segment. We are also successfully driving adoption among Type 2 users, a large market segment that has tremendous long-term growth potential, particularly as CGM becomes more widely adopted. We are learning that Omnipod is uniquely well suited for Type 2 users. Because awareness of Omnipod remains low, we are investing to raise awareness across the globe. We are advancing our direct-to-consumer advertising campaign in the U.S., as well as our pilot program in Europe, primarily in the United Kingdom. While our DTC efforts remain in early stages, the response has been encouraging in all markets where we’ve tested it. And we believe DTC is a contributing factor that helped to drive record U.S. and global new customer starts this past quarter. Our growth is also supported by our superior technology, robust innovation pipeline and expanding clinical evidence that shows how life-changing Omnipod can be for people living with diabetes. The tube-free Omnipod experience is unique, and we know from our clinical trial participants that Omnipod 5 will be a transformative product for Insulet and for the diabetes community. We cannot wait to bring it to market. We are making good progress in this regard, and our recent interactions with the FDA continue to give us confidence in a second half limited market release. A third quarter FDA clearance is unlikely, so we now estimate clearance will be later in the fourth quarter. Through our ongoing collaborations as part of the breakthrough devices program, among other things, the FDA has provided clarity on open questions related to full smartphone control. Based on their feedback, we are updating our smartphone app to add a product feature, and we are working through the final steps towards clearance. This work is well underway and gives us confidence in our expected clearance timing. Insulet is a pioneer in this space with full phone control and we are grateful for the agency’s support and guidance and delighted to be close to clearance. Achieving full smartphone control is a complex and novel innovation that we know will be enthusiastically welcomed by our customers. We are committed to providing the best possible user experience and getting Omnipod 5 to market as quickly as possible. While we work through to clearance, our teams are successfully securing pharmacy coverage for Omnipod 5, testing all elements of our customer experience and preparing for a successful limited market release. No other product on the market delivers the value, technology and functionality of Omnipod 5. We believe it will significantly change the lives of people with diabetes and their caregivers through unparalleled ease of use, better quality of life and improved outcomes. From a commercial perspective, we previously communicated the core components of our pricing and access strategies. In the U.S., Omnipod 5 will be available only through the pharmacy, and it will be priced at parity with Omnipod DASH. We will continue to provide no upfront costs and no long-term lock-in period. In addition, any customer, whether an MDI or tubed pump user, will be able to try Omnipod 5 for free at any time through our 30 Days of Freedom program, which has already helped to fuel increased Omnipod adoption. Given this approach, we expect the low monthly out-of-pocket costs for Omnipod 5 will be comparable to Omnipod DASH and MDI, which we believe is a tremendous value given the improved outcomes and quality of life Omnipod 5 delivers. The majority of our Omnipod DASH customers in the U.S. have a monthly pharmacy co-pay of under $50, and we are thrilled to offer the same benefit to our Omnipod 5 customers. We have already contracted more coverage for Omnipod 5 than what Omnipod DASH had after commercial launch, setting us up for a successful limited market release. The value Omnipod 5 can deliver to people with diabetes is clear, as demonstrated by the compelling clinical data we recently shared at major diabetes conferences, including Omnipod 5 preschool pivotal and pivotal extension results and our non-AID system data. While we are proud of all the impressive Omnipod data, our Omnipod 5 preschool pivotal data certainly stands out. Our study represented the largest data set of primary outcomes for any AID system down to age 2. The results were compelling and included a statistically significant overall A1c reduction, a significant increase in time and range and no severe adverse events. 100% of the preschool participants moved into the extension phase, which shows these families did not want to give up their systems. This clearly speaks to the tremendous value children and their parents experience on Omnipod 5. The results mirrored Omnipod 5’s strong performance across other age groups, including up to age 70. This is quite an accomplishment as many experts agree the pediatric age group is the most challenging for clinical care. The results also demonstrated a significant improvement in sleep for caregivers, which is a very common concern for parents. We are so pleased to see these young children greatly benefit from our technology. They are often unable to verbalize how they are feeling and are too young to manage this complicated disease on their own. We believe Omnipod 5 will greatly ease the burden of diabetes for these vulnerable children and their caregivers. Another major highlight of our pivotal extension was the further reduction in A1C levels because they already were significantly reduced during the first pivotal phase. To see a greater reduction speaks to the durable power of Omnipod 5 to transform diabetes management. While we are proud of all of our clinical results, there is much more to do, and we will continue to invest in our clinical roadmap, including expanding Omnipod 5’s indication down to H2 and for Type 2. Our preschool internal clinical efforts are advancing well, yet our FDA submission is contingent upon the timing of Omnipod 5 clearance. We are now planning for this expanded indication in 2022. Additionally, our Type 2 feasibility study is advancing. We recently concluded the 3-month study period and are now in the extension phase. We expect to share the results of our Type 2 study at an upcoming conference. Finally, while the upcoming clearance and launch of Omnipod 5 remain our top priorities, our pipeline is robust, and we believe some of our best innovations are yet to come. As such, investing in our software development, data science and other capabilities remain a critical priority. Our development work is well underway, including iOS and Libre integrations, the international launch of Omnipod 5 and database innovations aimed at providing insights for our customers. Beyond Omnipod 5, we are developing technologies that we believe will simplify and improve the lives of people living with both Type 1 and Type 2 diabetes. Turning to global expansion, we have spent the last few years working to expand awareness and access to Omnipod across our key international markets. Our latest efforts have been in Australia, where we continue to plan for an Omnipod DASH launch this year. This builds upon our expansion into Turkey earlier this year and across Europe and the Middle East last year. We expect our international expansion efforts will drive access to a huge global addressable market, far beyond the estimated 11 million to 12 million people living with insulin-dependent diabetes across our current global footprint. As we look ahead, we know there are additional opportunities to further expand our addressable market and to help improve the lives of people living with diabetes around the world. We continue to drive strong growth in our international markets with the recent full launch of Omnipod DASH, and we fully expect to bring Omnipod 5 to these markets in the future. Lastly, we continue to invest significantly to further strengthen and scale our global manufacturing operations. We are in a strong position to meet growing global demand for Omnipod DASH, support the upcoming U.S. release of Omnipod 5 and scale our operations to support our future innovation pipeline and geographic expansion initiatives. We’ve made terrific strides on our path to build on our operational excellence, which we believe to be a critical enabler of sustainable revenue growth and margin expansion in the years ahead. In closing, we are on track to deliver another strong year of financial results and strategic progress, and we are gearing up for the upcoming launch of Omnipod 5. Our mission to improve the lives of people with diabetes has never been more important, and our innovative solutions have never been more needed.

Thanks, Shacey. We achieved another solid quarter of financial results with building momentum from record global new customer starts and are on track to drive accelerated revenue growth in the second half of the year. To support our accelerating growth, we continue to invest in our strategic imperatives through innovation, clinical, commercial, manufacturing and other supporting functions that position us for sustainable, long-term global growth. We generated 13% revenue growth in the second quarter finishing within our guidance range, driven by total Omnipod growth of 16%. As expected, the pandemic’s effect on 2020 global new customer starts impacted results again in Q2 given the annuity nature of our revenue model. Although the impact of the pandemic headwind continues to linger in the United States and is still more challenged in some of our international markets, we expect the major impact is largely behind us. In Q2, we delivered U.S. Omnipod revenue growth of 17%, which was at the low end of our expectations due to the higher-than-expected rebates from one of our largest pharmacy partners of approximately $4 million. Approximately half of the adjustment related to a rebate catch-up from prior to Q2. As a reminder, Q2 also had a tough comparison with approximately $4 million to $5 million of channel build in the prior year. During the second quarter, we continued to build our customer base with record U.S. new customer starts, ongoing Omnipod DASH adoption with both Type 1 and Type 2 customers and the mix benefit we realized as we drive increased volume through the pharmacy channel. These growth drivers continue to trend upward in Q2 as Omnipod DASH drove almost 80% of our U.S. new customer starts and we grew pharmacy channel volume to over 45% of our total U.S. volume. In Q2, international Omnipod revenue grew 13%, which finished slightly ahead of our expectations. Our growth in the quarter was driven by our success with Omnipod DASH in expanding our customer base throughout our markets, as well as the team’s ability to successfully execute through continued COVID-19 challenges. Our global attrition and utilization remained stable during Q2. Drug delivery revenue declined 13% during the second quarter, finishing slightly ahead of our expectations. As a reminder, order volumes were elevated in the prior year as a result of the pandemic and are normalizing this year as expected. Gross margin was 69.4% in the second quarter, representing a 640 basis point increase or a 510 basis point increase on a constant currency basis. This expansion was in line with our expectations and marks our highest gross margin reported to date. Overall, our gross margin expansion continues to be driven by our improved manufacturing operations and supply chain efficiencies, lower COVID-related costs and the mix benefit of increasing volumes in the U.S. pharmacy channel. These benefits were partially offset by the expected higher mix of costs as we continue to ramp U.S. manufacturing, including our third highly automated U.S. line, which is now producing sellable product. Operating expenses were in line with expectations as we continued to invest in our robust innovation and clinical pipelines, the upcoming launch of Omnipod 5 and other commercial investments, including our global direct-to-consumer advertising initiatives and our international expansion plans. Operating margin was 10%, down 220 basis points, and adjusted EBITDA margin was 19.9%, up 40 basis points. Our operating income was in line with our expectations as we continue to invest throughout our global business to fuel our long-term growth trajectory. Turning to cash and liquidity, we remain in a strong position with no near-term maturities and further runway to continue to invest in our business. We ended the quarter with $872 million in cash and short-term investments. We have also taken a number of steps to strengthen our capital structure, including successfully executing a $500 million Term Loan B financing. We used the proceeds to repurchase 92% of our convertible notes due 2024, which resulted in a $40 million loss on extinguishment that is excluded from adjusted EBITDA. Additional notes were since converted and now approximately 3% of the original issuance remains outstanding. Following these transactions, on an annual basis, we expect our net cash interest expense will be approximately $30 million and non-cash interest expense will be significantly reduced to approximately $25 million to $30 million. Now turning to our outlook for the remainder of the year, we are maintaining our full year revenue guidance of 16% to 20%, including total Omnipod revenue growth of 18% to 21%. We continue to expect a full year U.S. Omnipod revenue growth range of 22% to 25%. We expect our growth to be driven primarily by expanding Omnipod DASH volume, increased access and awareness, our differentiated pay-as-you-go model, and the mix benefit in the pharmacy channel. In addition, we expect further penetration and customer adoption in both the Type 1 and Type 2 markets. Partially offsetting these tailwinds are less Omnipod 5 incremental revenue than we had previously anticipated and the Q2 rebate adjustment. For international Omnipod, we continue to expect full year 2021 revenue growth in a range of 11% to 15%. Omnipod DASH adoption rates continue to grow following its launch near the end of last year. Despite the lingering impact of COVID across several of our markets during the first half of 2021, our team has successfully driven additional market penetration and strong new customer growth. The runway to expand Omnipod adoption across our international markets is large, and we see clear pathways for future growth. As a reminder, we had a tough comp due to the $8 million to $9 million of pandemic-related inventory we experienced in the prior year as well as from our initial launch of Omnipod DASH. Lastly, we are maintaining our expectations for drug delivery revenue in a range of 11% decrease to a 4% increase. Turning to gross margin, we now expect full year gross margin to be in the range of 68% to 69%. The core drivers of our gross margin expansion have not changed as we build scale and create efficiencies throughout our global manufacturing operations, as well as the ongoing benefits of volume shift into the U.S. pharmacy channel. In addition, we expect to benefit from lower COVID-related costs. We continue to expect operating expenses will largely rise in line with revenue growth this year. We view the investments in consumer-focused innovation, our sales and marketing teams and our international expansion efforts as critical to our long-term growth profile. We are reaffirming full year operating margin in the low double digits range. Our operating margin expansion will be driven by our strong top line growth and gross margin improvements as well as our expectation that the one-time costs that occurred in the fourth quarter of last year will not recur this year. On a sequential basis, we expect operating margin improvements throughout the second half of this year primarily due to our expected accelerated revenue growth. We continue to expect capital expenditures to increase this year with the investments throughout our global manufacturing operations, as well as our strategic initiatives. Turning to our third quarter 2021 guidance, we expect total company revenue growth of 11% to 18%. This includes total Omnipod revenue growth of 17% to 23%. We expect Q3 U.S. Omnipod revenue growth of 23% to 28%. As a reminder, Q3 growth also benefits from the net impact of estimated distributor channel destocking last year. The significant step-up in our sequential growth rate is primarily due to the impact of channel stocking and destocking in the prior year, volume ramp from our accumulating record-setting new customer start quarters, annualizing the most impactful COVID-19 related quarters from 2020 and, to a lesser degree, the mix benefit from volume through the pharmacy channel. We expect Q3 international Omnipod revenue growth of 8% to 14%. We continue to expect our growth rate to be partially offset by the trailing pandemic-related headwinds that existed in the second half of 2020 and the first half of this year in many of our international markets. Also, as a reminder, Q3 growth is impacted by the estimated $4 million to $5 million distributor channel stocking we experienced in the third quarter of last year, ahead of the international full market release of Omnipod DASH. We expect drug delivery revenue to decline 40% to 28% due to the normalization of order volumes as compared to elevated levels in the prior year resulting from the pandemic. In conclusion, we have sustained momentum throughout the business and are on track to deliver another year of strong revenue growth and margin expansion while advancing our strategic imperatives. Our financial position is sound and provides us the flexibility to invest in our leading innovation pipeline, access and awareness initiatives, global sales force, international expansion and manufacturing efficiencies. All of these efforts are designed to drive significant shareholder value over the long-term and strengthen our ability to improve the lives of people with diabetes across the globe.

Thank you, sir. Our first question comes from the line of Travis Steed from Barclays. Please go ahead.

Hi, thanks for the questions. I missed part of the prepared remarks, so apologies, but I did want to get more color on the Omnipod 5 Pod delay. And just to make sure I understand all the moving parts there, what exactly happened and what gives you confidence that you are going to have the approval by Q4?

Sure, Travis. Yes, I appreciate the question. I think it may be helpful to take a step back to where we were in May. We had received the agency’s feedback on our submission, and there were no surprises, which had put us on track for our anticipated timeline. We are very fortunate to be a part of the breakthrough devices program, and that allows us frequent collaboration with the agency. So we took the opportunity to discuss in more detail full mobile phone control and get clarity on the FDA’s response. Their feedback was really helpful for us and valuable and it prompted us to update our app with a feature that we believe will improve the customer experience. So that is basically what’s happened since May. And the work is well underway, including all of our verification and validation testing. And then our assessment of that final work and the FDA’s review and then, of course, some buffer because times are not normal given the COVID workload, that all puts us towards, we believe, late in Q4 clearance and limited market release. So that’s kind of where we are. I would just emphasize that in the meantime, we are not standing still; the teams are doing great work preparing for a limited market release and I think making really good use of the time that we have while we get to final clearance.

Thank you. I show our next question comes from the line of Larry Biegelsen from Wells Fargo. Please go ahead.

Good afternoon. Thanks for taking the question. I guess if I am going to use my one question on Omnipod 5, I will ask what is the final feature, Shacey? And I guess when do you plan to submit that to the FDA? And just given the delays there, what gives you confidence and what’s the buffer that you are incorporating to get to that late Q4 clearance? Thanks for taking the question.

Sure. Yes. Thanks, Larry. The feature is related to full smartphone control. So it’s the way that the app interacts with the system. It has nothing to do with our core system or our algorithm, which we know delivered outstanding clinical results across the broadest age range of any AID pivotal study. So nothing that will impact system functionality, but it is something that we believe will deliver a better customer experience. And I think, ultimately, this feedback was helpful for us. What gives us confidence when we think about the limited market release in Q4 is our interactions with the agency. We’ve factored in all of the work that we have underway plus review time and plus buffer. I don’t think it’s helpful to provide exactly the amount of buffer, but what I will say is we’ve learned a lot because we’ve been under review for quite some time, all while the pandemic has been underway as well. So, we do understand how long the back and forth has been taking, how much longer that’s been than traditional timelines, and that’s what we’ve factored in that points us to Q4. So I think it’s really those interactions that give us that confidence. And we have cleared an enormous amount of hurdles. Up until this time, we really believe we are in the final stages here and remain confident in a second half, but like we said, end of Q4, limited market release and clearance.

Thank you. I show our next question comes from the line of Robbie Marcus from JPMorgan. Please go ahead.

Great. Thanks. Two for me. I will ask them both upfront. One on the pharmacy rebate, I was hoping you could just go into a little more detail of exactly what that was and how it worked. Was that – did you over-earn from this – from this payer and now you are rebating it back? Is it one-time? How do we think about that? And any further impacts you expect going forward? And then second on the U.S., the results are obviously better when you put the rebate back in. But it would be great to hear what you’re seeing out in the field. Do you think people are holding back on starting Omnipod as they are waiting for Omnipod 5, I’m sure they hear it in the news, just thinking about how it’s impacting the field if at all? Thanks.

Sure, right. If you want, I can start that one, Shacey, on the rebate question, and glad you brought it up, Robbie, because it gives us an opportunity to share a little bit more color around it. It is due to updated rebate information from one of our largest pharmacy partners. So as we mentioned in the prepared remarks, that partially related to prior to Q2 and it’s a year-to-date catch-up, and that result changed our rebate expectations as well. So our pharmacy partners have several quarters in arrears to correct their rebate submissions, and we have a wide range of rebate percentage programs, and as we execute our strategy and ramp our business in the pharmacy. So we anticipate variability in the rebates. However, this one was much larger than expected. It’s really a growing pain for both of us. It’s new for us, and it’s new for our pharmacy partners. So as they set up our agreements and process rebates for us, this will settle down over time. Once we get a majority of our business in the pharmacy and get more established, I don’t think we’ll see this type of variability going forward. Although the net rebate this quarter ends up much higher than expected, it doesn’t change our strategy in the pharmacy. It is a significant differentiation for us and better for our customers. So as the pharmacy channel becomes a larger portion of our revenue, rebates will be one of the metrics that could impact our results going forward. And we do – given the rebate percentage difference there, see some variability. In relation to guidance, it is a metric that we factor into both the high end and the low end.

Great. Thanks, Wayde. Yes, I think it's important to emphasize that pharmacy is a strategic pillar for us. And for all, I think Wayde mentioned the reason, obviously, it’s a better customer experience, but it’s also a more efficient channel for physicians and for Insulet, and that’s really important as we get ready to scale with the launch of Omnipod 5. And then your question, Robbie, on what are we hearing in the field. The one thing I would say is behind the numbers, it’s just important and sometimes it gets lost because of the business model. But behind the numbers, we had a record new patient start quarter. So that’s important as we think about are people holding off? It certainly would not be evident in our numbers based on new customer starts in this past quarter. And that said, you’re right that there is growing consumer awareness of Omnipod 5. The company and I personally get daily emails from customers that are anxiously waiting. So I don’t believe customers are holding off based on the new customer starts numbers, but there is growing awareness of the technology that’s coming.

Thank you. I show our next question comes from the line of Danielle Antalffy from SVB Leerink. Please go ahead.

Hi, good afternoon everyone. Thanks so much for taking the question. And I don’t know if this is for Wayde or Shacey, or maybe both of you. But I guess with the approval for Omnipod 5 now coming later this year, consensus pre-today was looking at like 20% growth in 2022. So a slight acceleration if you’re looking at the midpoint of the range. I mean you’re talking about still a limited market release for Omnipod 5. I’d just be curious what you can say about how the change in the timeline for Omnipod 5 might impact the outlook for 2022, if at all, and how that accelerating growth via the consensus numbers again, pre-today, how achievable that might be? Thanks so much.

Yes. Thanks, Danielle. Maybe I’ll kick us off, and then Wayde can give some comments on any color he wants to give regarding 2022 with Omnipod 5. I think ultimately, we know that the market is waiting for Omnipod 5. So we’re going to do whatever we can to make our limited market release as efficient as possible. It’s important to do a limited market release. If you think about what’s going to happen with Omnipod 5, we know that people today who use DASH or classic Omnipod or multiple daily injections or tubed pumps, they are all going to have a different customer journey coming onto Omnipod 5. They are each different pathways, and we will have different requirements. For example, all our DASH customers already know the benefits of pharmacy and low out-of-pocket costs. We’re going to have to get two pump users or potentially MDI users comfortable with the benefits of the pharmacy and then each of those different patient segments have different training and onboarding needs. And so those are the types of customer experiences that we’re testing today to make sure that we’ve got everything in a great position for the launch. And then the other governor is access. That’s one of the reasons why we gave some color that the team is making great progress establishing access. So we are doing everything that we can to make as efficient an LMR as possible. But we do want to do one. And hopefully, not hopefully, today, for sure, we are in a better position today than we were a quarter ago. A quarter from now, we’re going to be in an even stronger position. So I think we’re going to head into 2022 in a really strong position and hopefully keep the LMR as efficient as possible.

Yes. Just picking up on the guidance part of the question there, Danielle, we aren’t guiding to 2022 yet. But I can certainly appreciate the question. And we can provide some color on how we’re thinking about the U.S. guidance for ‘22 at this point in time. 2022 is going to be a strong year for us. And we will include the ramp of Omnipod 5 in 2022. However, as you’re asking about here, and as Shacey said in her prepared remarks, that with the LMR now starting most likely at the end of Q4, we would expect that some portion of the LMR will extend into 2022 with full market release coming sometime later in 2022. And so we won’t likely get a full year – a full market release in 2022 at this point, but it is going to be a very strong year for us. And so we’re not going to comment specifically on guidance numbers or ranges at this point. A couple of other things to think about, the pandemic is always a consideration. And given our annuity model and the persistence of the pandemic here into 2021, it will be somewhat of a headwind for us in 2022. But we’ve got a ways to go here throughout the rest of ‘21. We will see what the Delta variant and how warnings in some countries and some of the challenges that are coming out impact us. But I don’t think we’re going to be free and clear of it yet in 2022. But let’s see how things progress through the rest of 2021. And then as usual, we will give our guidance in the Q1 call. We do have other tailwinds and growth drivers that are accelerating here into the second half, and that momentum will carry into 2022. Further DASH penetration, the Type 1 and Type 2 customer adoption really being aided by CGM, so we’re riding that wave as well. We’re continuing to expand in the pharmacy with our pay-as-you-go model, our direct-to-consumer program. So, a lot of momentum in the business, quite a few tailwinds, a couple of headwinds that we are monitoring and that’s some color for you; we will get into the 2022 guidance on our Q1 call.

Thank you. I show our next question comes from the line of Jeff Johnson from Baird. Please go ahead.

Thank you, good afternoon guys. Let me just – Wayde or Shacey, I guess, either one follow-up on Danielle’s question there and ask it maybe a slightly different way. When we thought Omnipod 5 was coming maybe midyear or so, it was kind of a 6-month limited market release. But Shacey, to your point, a lot of that, I think, was getting commercial coverage in place, and it sounds like you’re making good progress there. Is it fair to think about that LMR then could be cut in half? Think about it as one quarter and then moving by the second quarter into that full market release? And Wayde, I know – respect that you’re not giving ‘22 guidance, but it feels like there should be some shortening of that LMR schedule given the commercial coverage you’ve already established? Thanks.

Yes. Thanks, Jeff. We are going to do everything that we can to drive as efficient a limited market release as possible. I think just something to keep in mind is limited market releases are designed to uncover things that weren’t contemplated in all of the testing and launch preparation. So I think that’s the caution. Of course, we are in a stronger position. We’re securing coverage. I think all of this sets us up for success in trying to shorten the limited market release. But I caution everybody by saying, if we bump into something we are going to address that. That’s the whole purpose of doing a limited market release. I think the teams are doing great work, and certainly ameliorating the potential of running into something with all of the work that we’re doing, and we are certainly establishing access, which is one of the main governors. And so those are great signs. But I don’t – of course, we’re going to take our learnings from the limited market release, and we’re going to make sure that we’re providing the best possible customer experience.

I show our next question comes from the line of Matthew O’Brien from Piper Sandler. Please go ahead.

Good afternoon. Thanks for taking the question. I know everybody is focused on the 5, slippage here. But I’m curious about the core business. And to your point, Shacey, that the growth in new patients was the record that you saw. Can you talk a little bit more about some of the dynamics there that are driving new patient additions so much higher if it’s Type 2s, if it’s pediatrics? Just talk about some of those dynamics and then how those might be augmented once you can get 5 on the market more so next year. Thank you.

Yes, Matt, thanks for the question. Actually, I think it’s really exciting to see what’s happening with the core business right now. What’s driving our growth? I would point to two – well, three dynamics. The first is DTC. So this investment that we’re making in raising awareness is definitely working and we think was one of the drivers for our record – by quite a bit in the U.S. new patient starts. And that’s coming broadly across Type 1, primarily among multiple daily injection users and then also Type 2. And so Type 2 would be the second dynamic that I would point to. We are in a pretty rarified position here. Nobody else is having the success that we’re having unlocking this market opportunity. And it’s because we have a product that is uniquely well suited to the Type 2 user in its simplicity and in its cost profile. And so that’s the third piece, is the pharmacy and pay-as-you-go. And that’s helping certainly to make our technology more accessible and more affordable to the people that are becoming increasingly aware of it. And the reason why we like these dynamics, these underlying dynamics is because when we launch Omnipod 5, it will be additive to these things. We are – we fully intend to maintain our advantage in Type 2. We fully intend to maintain our advantage in the pharmacy and our pay-as-you-go model. And we’re going to then deliver what we think will be a game-changing technology in Omnipod 5 to the market. And so the team could not be more excited because we’ve got this underlying momentum that’s helping to deliver record-setting new patient starts. And of course, we’re all gearing up – every aspect of the company right now is gearing up for an Omnipod 5 launch and just incredibly excited about what it will bring to patients. So I think it’s an exciting additive technology to what is already a really strong momentum in our business, particularly in the U.S.

Thank you. I show our next question comes from the line of Margaret Kaczor from William Blair. Please go ahead.

Hi, everyone. Thanks for taking the question. I wanted to focus in on the pharmacy channel and kind of that increase in adoption this quarter. It does seem like it did pop up, certainly for new patient starts and perhaps for active users as well. So was there something different that you guys were doing to drive that uptake? Is it DTC? And I guess, as we look a year from now, where should we see that active base or is it just going to be a little bit more predetermined on the launch and timing of Omnipod 5? Thanks.

Yes. Great question, Margaret. So, there are a few things happening. One, we continue to tick up access, and that increased notably. And as we increase access, more people in our base have the opportunity to move into the pharmacy. So that’s one piece of it. The second is DTC is definitely driving demand. And if you think about now, where Wayde mentioned at cumulative record-setting quarter, so three quarters where we’ve got – in our new customer starts, I think on each of those quarters, between 70% and 80% of customers going directly into the pharmacy or directly onto DASH, the vast majority of that in the pharmacy. So that trend is just helping to drive more and more people into the pharmacy. I think in terms of where does this go, we fully expect to have the majority – or vast majority of our business in the pharmacy over the coming years. We do see Omnipod 5 as a big driver there. Omnipod 5 will be only available in the pharmacy. We know that there is growing demand among our existing users and also among the market. And so that will help us to continue to accelerate that move into the pharmacy. And I would also point to Type 2, all of our Medicare business is through the pharmacy. So as Type 2 grows, that is growing in the pharmacy, and that’s a great thing. What pharmacy does by providing Omnipod at the same out-of-pocket cost as multiple daily injection, it’s really remarkable for DASH today, and it’s going to be even more remarkable for Omnipod 5 tomorrow. So, just really great cost-effective therapy for our patients.

Thank you. I show our next question comes from the line of Jayson Bedford from Raymond James. Please go ahead.

Excuse me, good afternoon. I’ve kind of been going in and out, so hopefully, this question isn’t repetitive. But just on access, you mentioned that you’re progressing on your contracting efforts with Omnipod 5. Any way you can frame where you are with contracting and does this make the launch less limited, if you will?

Yes, Jayson, great question. So rather than giving details, just kind of conceptually where we are with access, we have more access established, more covered lives today with Omnipod 5 preceding launch than we did following launch with Omnipod DASH. So that puts us, I think, in a really strong position and a really nice trajectory as we get closer to launch. Every quarter, we establish more access for Omnipod 5. So as we get closer to launch, we’re certainly not standing still, but the teams are making great use of this time. And I think to your point, that sets us up for a successful, and what we certainly hope, is a very efficient limited market release. Because we knew that there are two primary governors to limited market release, one is access. And as you note, the team is making great progress there. The other is customer experience. That’s the one where we can’t really sort of say how quick that’s going to be until we get into the throes of it. I think the team is doing a really nice job testing all of the different pathways, testing the training and onboarding processes, testing the benefits investigation, all of that stuff. But that’s the type of thing that you really need live patients going through the process to test effectively. But that will be, I think, the primary governor as we look to move from limited market release into full market release, given how well we’re doing with access.

Thank you. I show our next question comes from the line of Kyle Rose from Canaccord. Please go ahead.

Great. Thank you for taking the question. I wanted to ask just maybe a bit of a bigger picture question. I mean, Shacey, this is in the second or third time on these calls you talked about investments you’re making in software. I think traditionally, we’ve become more accustomed to products in med tech being more focused on tangible things, like widgets and insulin pumps that you can touch. Maybe help us understand how you think about, maybe not necessarily with O-5, but maybe the next generation of products that are going to be maybe more software focused. And just how that might change the patient and the physician experience of the technology and the value you’re providing?

Yes, Kyle, thank you for the question. I think a great opportunity to just talk about the position that we see ourselves in as it relates to patient data. Very few companies have access to the volume of data that Insulet will have with Omnipod 5. We had mentioned earlier on a previous call that we’re putting SIM cards into our Omnipod 5 controllers. And then, of course, we will be offering full phone control, which means that we will have stream of real-time data coming off of a user that helps us understand how their continuous glucose is doing, helps us understand how they are interacting with the system. Helps us understand how much insulin is being delivered, when it’s being suspended, when they are eating. And so that provides us with incredible potential to generate insights that can be valuable to our customers, to their clinicians and potentially to payers as well in population analytics. And so we see ourselves just really well positioned, because it’s essentially a wearable technology that’s providing real-time data that we believe can help us help people achieve better outcomes through a variety of mechanisms. So I think you’ll hear us talk more about that as we get Omnipod 5 to market, how we see that and our role in that for our customers, including our consumers, our clinicians and our payers, but we do believe we’re very well positioned to provide value here.

Thank you. I show our next question comes from the line of Joanne Wuensch from Citi. Please go ahead.

Good afternoon and thank you for taking the question. I think one of the things that I’m hearing in the patterns of the questions tonight is, is there a positive thing that comes out of this delay? Does it mean you need to have a shorter limited launch? Does it maybe accelerate your Type 2 label or your product with Abbott’s Libre? And is there any way to address that or is just everything is pushed back, call it, 6 months?

Yes, Joanne, I think the positive thing that comes out of this is that the FDA has given us really valuable, helpful feedback that we think will ultimately enable us to deliver a product that is even better. But – and I also believe that the limited market release will be shorter as a result of this time that we’ve had to establish coverage. So that is good. How much shorter? That will rely on us really testing the customer experience and understanding if we’ve got learnings there that need to be incorporated or adjusted to. But the value that we’ve been able to have during this time is just the opportunity to establish coverage and continue to test the customer experience. Both of those things should help us to deliver a more efficient limited market release.

Thank you. I show our next question comes from the line of Anthony Petrone from Jefferies. Please go ahead.

Thanks. I hope everyone is doing well. A question on just collaboration behind the scenes on Omnipod 5 with Dexcom, they had some bullish language on their earnings call in the past couple of days. So just wondering what level of collaboration is going on behind the scenes ahead of launch later this year. That would be the first question. And then the follow-up question would just be maybe a longer term, sort of, opinion and view on the automated insulin delivery space, how you see it evolving next 2 to 3 years when you consider that we now have multiple offerings, either on market or coming to market imminently? Thanks.

Thanks, Anthony. Dexcom has been an outstanding partner, and it has been remarkable to see what they have done in the market and the value that they provided consumers. We really believe that they are helping to drive AID adoption, and so we could not be more excited for our combination offering. They have helped us across a number of fronts and collaboration has been incredibly strong. And obviously, they have an incredible technology. So that combined with Omnipod and Omnipod 5, we think is going to be a game changer in the market. It will be a game changer in terms of patient experience and patient outcomes, and it will be a game changer in the market in terms of our position. So we’re strong collaborators, strong partners today, and then, of course, working on G7 and future integration. And so that would be a really exciting part of our pipeline as well. In terms of the AID market, I think it’s very exciting to see what’s occurring out there. We see the trend in terms of CGM adoption among Type 1s. And what’s happening now with AID gives us great confidence that among Type 1 users, the pump market will double. And a big part of that will be automated insulin delivery. Of course, we believe we’re going to deliver the best product to market. And I think the thing that gives us excitement is that we have been competing so effectively with our non-AID system. And so, people are choosing Omnipod even though there is no CGM integration, and despite the fact that we’ve seen such dramatic uptake in CGM. So we think that we’re going to see the real power of the form factor now that we’ve got CGM integration and automated insulin delivery with Omnipod 5, because people will no longer really have a reason to choose an alternative device, which we know many people – if they prefer the pod form factor but choose another system because of Dexcom integration. So we’re really excited to even the playing ground there and really frankly leapfrog the field there. And then the other thing I would point to is just Type 2. All of these trends are more mature in Type 1. I talk sometimes about the competitive field, but I would say that among this large patient population, no one really needs to lose for us to win. If you look at the field, even in Type 1 where there is more maturity here, still today, somewhere north of a third of patients are using pump therapy. So there is a great opportunity for all of us to impact patient outcomes and provide better technology, better care for people living with Type 1 diabetes. The same trends are just burgeoning among Type 2. We’re really excited about our position there, and we expect that both CGM and certainly Omnipod 5 and integrated devices are going to grow among Type 2 users too over the coming years.

Thank you. I show our next question comes from the line of Ravi Misra from Berenberg. Please go ahead.

Hi, thanks for taking the question. Good evening. So just kind of maybe jumping on that last question, a little bit more big picture. You said earlier potential doubling of the pump market. I’m just curious, there is a lot of things going on here with access and new technologies and telemedicine that could kind of support that kind of statement. But just what do you think is, if I can kind of put it philosophically, just curious what do you think still needs work on in terms of getting us from that 35% to 40% today, to maybe significant majority of insulin delivery through pumps that’s not in existence right now, but something that is in your control? Thanks.

Ravi, you highlighted quite a few of them. When you talk about new technology and access, I would say for both of those, it is just how simple can we make both of those? How simple can we make the technology so that it can be easily and enthusiastically adopted by the masses, and how simple can we make access? Because still today, Omnipod has changed the game with pay-as-you-go in the pharmacy and we’ve made it simpler. But still today, there are too many hurdles for people to get on to these technologies, and that’s something we are committed to continuing to work to eliminate. So I would point to simplicity and technology, simplicity and access. And the last thing I would point to is awareness. And we’re really seeing it with DTC. We’re investing in awareness. We’re probably making a big impact in the market and helping everybody at the end of the day because we’re increasing patients’ awareness of technology. But what we saw before we invested in DTC was that patients’ awareness, even a Type 2 consumer’s awareness of their options, unaided awareness, was somewhere around 15%. So even a person with Type 1 could only name a pump manufacturer 15% of the time. So there is a massive opportunity here to just help people understand and gain more awareness of the treatment options that are available to them. And then we need to make them cost-effective and simple to access and to use.

Thank you. I show our next question comes from the line of Steve Lichtman from Oppenheimer. Please go ahead.

Thank you. Shacey, I was wondering if you could talk about international. What are the biggest incremental drivers we should be focused on for you guys internationally over the next, say, 6 to 12 months? Is it – whether it’s in terms of new countries or particular countries where DASH has recently launched and anything you can talk about relative to potential timing of Omnipod 5 outside of the U.S.? Thanks.

Yes. Thanks, Steve. When we think about international and the drivers there, DASH and continued expansion internationally will be drivers, particularly the adoption of Omnipod DASH, which we know is doing really well across our international markets, but room to continue to grow there. New market additions, so now in the last year or so, we’ve added a handful of markets that will contribute over time. But any new market addition, for us internationally, takes time to accumulate new users. It’s just the way that our business model works. So we view international as a long-term growth driver, and we will continue to invest in expanding into new markets that will drive growth over time. We, of course, also are really excited to bring Omnipod 5 to our international markets, which we view as the next growth driver. We aren’t going to give a timeline on that yet. We really want to get Omnipod 5 to market first in the U.S., and then we will update our timelines on things that everybody is asking about, iOS integration, Libre integration, G7 and international. But all of that work, every program I just mentioned is underway. And certainly, we’re going to aim to follow as quickly as we can once we get Omnipod 5 to market in the U.S., which we could not be more excited to do.

Thank you. I’m showing no further questions at this time. I would now like to turn the conference back over to Shacey Petrovic for closing remarks. Please go ahead.

Great. Thank you, everyone, for joining us today. As you can see, we continue to drive our strategy forward, and we have great momentum throughout the business and real confidence in our outlook. We are halfway through the year and what we expect will be another successful year for Insulet. The clinical evidence we shared speaks to the tremendous value our technology offers to those living with Type 1 and Type 2 diabetes. And we could just not be more excited for the launch of Omnipod 5, because we are confident it will mark an important new chapter for Insulet and, more importantly, for those living with diabetes worldwide. Thanks so much. Have a great evening.

Ladies and gentlemen, this concludes today’s conference. Thank you for participating and have a wonderful day. You may all disconnect.