Good afternoon, ladies and gentlemen, and welcome to the Insulet Corporation First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. 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, Investor Relations.

Thank you. Good afternoon and thank you for joining us for Insulet's first quarter 2023 earnings call. With me today are Jim Hollingshead, President and Chief Executive Officer; and Wayde McMillan, Executive Vice President and Chief Financial Officer. Bret Christensen, our Executive Vice President and Chief Commercial Officer, is also with us for the Q&A portion of our call. Both the replay of this call and the press release discussing our 2023 first quarter results and guidance will be available on the Investor Relations section of our website. Also on our website is our first quarter supplemental earnings presentation. We encourage you to reference that document for a summary of key metrics and business updates. Before we begin, we would like to inform you that certain statements made by Insulet during the course of this call may be forward-looking and could materially differ from current expectations. Please refer to the cautionary statements in our SEC filings for a detailed explanation of the inherent limitations of such statements. We'll also discuss non-GAAP financial measures with respect to our performance, namely adjusted gross margin, adjusted operating margin, 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 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'll turn the call over to Jim.

Thanks, Deb. Good afternoon, and thank you for joining us. We're off to a great start to 2023. We entered the year with a clear strategic focus and momentum in our business, and the Insulet team continues to execute and deliver on our ambitious expectations. We expect 2023 to be another year of strong growth and strategic progress. Our first quarter results exceeded our expectations, and today, we increased our revenue outlook for the rest of the year. We achieved another record first quarter for U.S. revenue growth of 49% and 35% for total Omnipod and once again delivered another record for U.S. and global new customer starts for any Q1. Omnipod 5 continues to be a driving force of our strong U.S. growth and in Q1, it represented almost 95% of our U.S. new customer starts. This revolutionary offering is transforming diabetes management. Last week, we also received FDA clearance for our basal-only Pod named Omnipod GO. This is a unique product for the type 2 market. It provides us with early entry into treatment pathways, gives physicians and people with diabetes a comfortable non-injection option to deliver and receive insulin and provides patients an improved experience. By eliminating the personal diabetes manager and offering preset levels of basal insulin, we are easing patients into insulin management while leveraging Omnipod's comfortable tubeless technology. We're excited about bringing this innovation to market in 2024. Now to Omnipod 5, which continues to disrupt the diabetes market with its elegance and ease of use as well as consistently impressive real-world outcomes. It has strengthened our position as the market leader by revenue and is rapidly helping us take leadership among new pump prescriptions, thanks to our high share of multiple daily injection new starts and the large number of customer switches from competitive tube offerings. In Q1, the mix of Omnipod new customers coming from MDI and legacy tubed pumps was an estimated 70/30 split compared to our historical 80/20 mix as a result of the strong number of competitive switches we continue to capture. Omnipod 5's ease-of-use, simplified access, quality of life and strong clinical outcomes, coupled with our team's execution, has positioned us to continue to win across all market segments. Omnipod 5 is truly unmatched compared to other AID systems, and the feedback we hear from customers speaks to its unique benefits. We recently heard from a health care practitioner who operates a clinic with almost 3,000 patients across both type 1 and type 2, many of whom use one of our Omnipod solutions. He has hundreds of patients now on Omnipod 5, and he is using it himself. He called Omnipod 5 a 'game changer' and said, 'Thank you for everything you do. I've waited 40 years for this product, and it's more than what I had hoped for.' This sentiment is echoed by so many HCPs who tell us that their Omnipod 5 patients span all age groups, including people over the age of 80 who have been on MDI for decades and would never have considered pumps before learning about and experiencing Omnipod 5. Omnipod 5 is delivering on our mission to improve the lives of people with diabetes. Much of this success is a testament to how we designed our system. As we do with all of our innovations, we designed Omnipod 5 with the customer 100% in mind, with a clear focus on how we could simplify each day, improve quality of life and drive better outcomes. We offer an algorithm that provides micro doses every five minutes to adjust the target versus other systems that need to adjust basal rates or give correction boluses. Plus with Omnipod 5, there is no need to disconnect. Our algorithm learns, adapts and personalizes for each user. Our users are able to achieve excellent time and range with the lowest incidence of hypoglycemia on the market. The real-world evidence we shared at ATTD with data from more than 31,000 Omnipod 5 users is unmatched by competitors. And we look forward to sharing a larger data set at the ADA Trade Show next month, building on the clinical outcomes and quality of life that only Omnipod 5 can provide. These clinical outcomes, combined with Omnipod 5's form factor and ease of use, are proving to be life-changing for our users. Our market leadership also depends on building awareness of and access to Omnipod, and our team continues to execute with excellence against these objectives. Our efforts to drive access and awareness are critically important, given how underpenetrated the global type 1 and type 2 pump markets are, driving growing need for advanced solutions. In the countries we serve today, we estimate there are approximately 11 million people with insulin-intensive diabetes who can benefit from Omnipod. Approximately 45% have type 1 and 55% type 2, and these markets remain vastly underserved. Pump penetration in the U.S. type 1 market is still only approximately 40% and only low single digits in type 2, and international market penetration is much below the U.S. There is a massive unmet need for insulin therapy solutions, which also means we have a massive market opportunity. The Omnipod platform, and especially Omnipod 5, will open that market even further. Prior to Omnipod 5, consensus was there was a natural cap on pump adoption of around 70%, but these estimates have all been built based upon the adoption curve of tubed pumps. You've heard us call Omnipod 5 a game changer, and we believe it changes this game. Omnipod 5's simplicity, ease of use, cost and access and, importantly, outstanding clinical outcomes driven by our advanced algorithm will allow us to bring customers into the market who would have otherwise never considered or never been considered for an insulin pump. We are seeing this in our market feedback already. Additionally, CGM is helping to pave the way by raising awareness for Omnipod and, in turn, we are bringing more people to CGM. Our sources indicate CGM U.S. type 1 market penetration is nearing 80%, making us even more confident in Omnipod 5's potential to grow penetration to well over 70% in the type 1 market alone. The Omnipod platform is quickly becoming the new standard of care for insulin delivery. A critical element to our access strategy is growing our presence in the U.S. pharmacy channel. This makes access to Omnipod 5 and Omnipod DASH much more affordable, convenient and efficient, with low co-pays and the ability to pick up product at the local pharmacy or through mail order with no lock-in periods. And the vast majority of Omnipod 5 prescriptions are filled in a matter of days compared to weeks through the DME channel. In the U.S. market, we price Omnipod 5 at parity with Omnipod DASH to drive access for Omnipod 5 quickly so we can make it affordable for the large number of people we knew would want it. The vast majority of our U.S. customers continue to pay less than $50 a month through the pharmacy channel, putting it relatively on par with customer costs for multiple daily injections. Combined with no upfront cost to start on Omnipod 5, we invite any patient to experience the difference of Omnipod. Omnipod 5, just like Omnipod DASH, is widely covered in the U.S. Our team’s customer-centric focus and commitment to operational excellence enabled us to drive incredibly strong coverage for Omnipod 5 in a short period of time, positioning us for the enormous level of affordable broad-based adoption we have seen. And as such, we will no longer provide quarterly coverage updates similar to the approach we took with Omnipod DASH. In practical terms, both Omnipod 5 and Omnipod DASH are now fully covered. Our clinical initiatives continue to progress, including our type 2 pivotal study. As a reminder, this three-month study will be the largest we have ever conducted, including up to 350 people with type 2 diabetes across 20 sites in the U.S. with a targeted focus on recruiting diverse and underserved populations. We began enrollment shortly after our last earnings call and we’re making great progress. We’re excited to show what Omnipod 5 can do for people with type 2 diabetes. We are also making great progress with our Omnipod 5 three-month randomized controlled trial. The last study participant in the U.S. is nearing completion and in France, enrollment is nearing completion and we expect the last participant to complete the study by the fall. We believe this RCT study will be beneficial when negotiating access and premium pricing. Both our type 2 pivotal study and our RCT will be valuable additions to the already strong clinical body of evidence that we have been building for Omnipod 5 over the last several years. Fueled by the success of Omnipod 5, our teams are already working on what’s coming next. As I mentioned, we received clearance for Omnipod GO in the U.S., which should further build on our type 2 leadership position. We estimate the total addressable market for Omnipod GO is at least 3 million people in the U.S. alone, doubling our U.S. TAM. We expect to begin a small pilot program this year in select locations and remain on track for a commercial launch in 2024. We have several competitive advantages in the type 2 space, including those that exist for us in the type 1 market, such as our unique form factor and our U.S. pharmacy channel access. In Q1, individuals with type 2 represented an estimated 15% to 20% of our U.S. new customer starts across our Omnipod portfolio of products. This percentage is lower than historical levels due to the tremendous success of Omnipod 5, which like all AID systems has an indication for only the type 1 market. On an absolute basis, new customer starts in the type 2 space remain strong. Our development work to integrate Omnipod 5 with DexCom’s G7 and Abbott’s Libre systems, as well as our iOS integration efforts continues to progress very well. I want to take a moment to congratulate Abbott on their recent Libre 2 and Libre 3 iCGM clearance milestones. That is quite an accomplishment. Both of our CGM partners have made exciting progress and we’re thrilled to be advancing our development efforts with both for the benefit of our current and future customers. We believe we offer the best AID system on the market and adding CGM of choice for our current as well as future customers will only strengthen that value proposition. Moving on to our international operations where we are excited to introduce Omnipod 5 in the UK in the middle of this year and in Germany in the fall, and we are currently training HCPs in both markets. This marks the first time we’re bringing a cloud connected Omnipod device to international markets, delivering the benefits of near real-time data management to our customers and HCPs. Our launch of Omnipod 5 in these countries marks the beginning of our stage international rollout with a broader rollout across our international markets next year. Another one of our competitive moats is our global manufacturing capabilities, which are critical to our long-term growth plan and ability to fulfill our mission. While we continue to navigate some challenging macro-related headwinds, we are securing components and producing pods ahead of forecasted demand levels, ensuring global supply for our expanding customer base. Additionally, we are making great progress building our new manufacturing facility in Malaysia, which will further strengthen our global capabilities. We are on target with our build schedule and expect to take possession of the facility by the end of this year, placing us on track to begin manufacturing in 2024. Earlier this week we published our 2022 sustainability report noting exciting progress across a number of environmental, social and governance initiatives. As a result of all of our initiatives, we were named by Newsweek as one of America’s most responsible companies for 2023. This past quarter, we also were pleased to be added to the S&P 500. This is a fantastic achievement for Insulet and speaks to the hard work and dedication of our entire global team as well as the success we are having growing the company and executing our mission. Before I turn the call over to Wayde, I want to comment on the changes to our organizational structure we announced this afternoon. Our business is enjoying incredible momentum and we are confident we can build on that. Omnipod 5 is transforming diabetes management and we are just getting started. Omnipod 5 is a revolutionary offering, delivering the most convenient therapy experience with world-class clinical outcomes as our results clearly demonstrate. And Omnipod 5 is also novel because it gives us the opportunity to use cloud connectivity and data to constantly improve all aspects of the end-to-end customer experience. In addition to that, we are now the market leaders in the type 2 space and we have a huge opportunity to expand there with the portfolio of therapy options. And of course, we are early in our efforts to expand internationally. In order to capture those opportunities and reach the millions of patients that need our help, we’ve decided to make some changes to how we operate. It has been almost a year since I assumed the CEO role and I could not be more proud of how well our team continues to execute. Over that time, we’ve taken a close look at our organizational structure and working processes and in order to both continue our momentum and capture the full palette of opportunities we see for growth, we need to do three things: elevate and integrate our technology stack and especially our cloud and data analytics capabilities, invest in regional and local markets to drive growth and expansion and most importantly, get even closer to our customers and orient the entire organization around the end-to-end customer experience. Therefore, as we announced earlier today, we have created two new roles in the organization effective July 1. The first is Chief Product and Customer Experience Officer responsible for product vision and execution, including franchise management, product management and driving the end-to-end customer experience across the enterprise. Eric Benjamin, our Executive Vice President of Innovation and Strategy will take on this new role. The second is Chief Technology Officer responsible for software and hardware engineering, information technology, cybersecurity, digital and data services and system architecture. Mark Field, our Group Vice President of Software Engineering will step into this new role. On behalf of the entire Insulet team, I’d like to congratulate Eric and Mark and thank each of them for their leadership. We also announced that in order to more effectively drive growth in our international markets, we are transitioning from a structure that had a Global Chief Commercial Officer role to one with two distinct commercial leaders, one for U.S. and another for international. As a result of that decision, Bret Christensen is leaving Insulet on May 5 to pursue other opportunities. He has agreed to provide consulting services during the transition period. We want to thank Bret for everything he has accomplished during his time at Insulet. He played an important role in so many key milestones for us, including our moving to the pharmacy channel and of course the launch of Omnipod 5. We wish Bret all the best and I know he wishes us all the best as he’s here today with us on the call as well. Thank you, Bret. I’m confident that the refinements we are making to our organization structure will help us to not only continue our terrific momentum, but also improve our efficiency, speed our time to market with new innovations and accelerate our growth in international markets. I look forward to continuing to work with our entire Insulet team to realize our company’s immense potential and continue to drive our mission to simplify the lives of the millions of people around the world living with diabetes. In closing, the first quarter marked a strong start to what we are confident will be another successful year for Insulet. Omnipod 5 is transforming the market and changing the way that people manage their diabetes. HCPs are adopting and championing Omnipod 5, helping to bring it to the thousands of people with diabetes who benefit from it. We are well positioned to continue to expand access to Omnipod 5 globally and lead the industry in innovation. It takes a company-wide effort of all of our employees to generate the growth we are consistently delivering while investing in our business to drive sustainable growth and value creation for years to come. I will now turn the call over to Wayde.

Thanks, Jim. First quarter results exceeded our expectations and we made further strategic progress. We delivered record U.S. and global new customer starts for any Q1. And in the U.S., they were the second highest of all time, slightly below last quarter’s record. We generated 23% revenue growth in Q1 finishing above the high end of our guidance range. This was driven by total global Omnipod growth of 35%. On a reported basis, for total revenue, foreign currency was a 210 basis point headwind compared to Q1 of last year. U.S. Omnipod revenue growth was 49% exceeding our guidance range. Revenue growth continues to be driven by our annuity-based model with cumulative record new customer starts and growing U.S. pharmacy volume. This includes an increasing contribution from Omnipod 5 and a premium for the Omnipod 5 and Omnipod DASH pods in the U.S. pharmacy where we provide the personal diabetes manager for no charge. Omnipod 5 ramp dynamics, unlike prior quarters, resulted in a net headwind for the quarter of $2 million. Similar to last quarter, we benefited from an estimated $14 million net volume benefit associated with new Omnipod 5 customers in large part due to existing customer conversions from Omnipod DASH and Classic Omnipod who received their starter kits and first refill orders in the quarter, as well as some initial stocking in retail pharmacies. This is net of some Omnipod 5 customers skipping an order in the period. This benefit was more than offset by a reduction in estimated channel inventory days on hand for Omnipod 5 of approximately $8 million and another $8 million reduction associated with actual and expected sales returns for Omnipod DASH and Omnipod Classic as retail pharmacies convert their inventory to Omnipod 5. Consistent with Q4, our Q1 Omnipod 5 and Omnipod DASH new customer starts combined were 100% of our total U.S. new customer starts, which we expect to be the case on an ongoing basis. This is especially important given our focus on moving increasing volume through the pharmacy channel, which was over 85% of our total U.S. volume in the quarter. International Omnipod revenue increased 10% in Q1 exceeding our guidance range driven by ongoing Omnipod DASH adoption. On a reported basis, foreign currency was a 620 basis point headwind over the prior year, which was in line with our guidance. Our estimated global attrition increased slightly to approximately 10% in Q1. We estimate international attrition increased to over 10% as a result of continued AID competition, while U.S. attrition improved to under 10%. We estimate global utilization trends remain consistent with seasonal trends. Drug delivery revenue declined 98% within our guidance range. Gross margin was 67.2%, representing an approximate 380 basis point decrease, which included a favorable foreign currency impact of approximately 30 basis points. Cost of revenue included income of $8 million due to a lower estimated cost associated with the medical device corrections we announced last year. Excluding this benefit, gross margin was 64.9%, representing a 610 basis point decrease in line with our expectations. Our growing volume in the U.S. pharmacy channel, including the associated premium positively contributed to gross margin. This was more than offset by expected higher mix of cost due to the ramping of Omnipod 5 and our U.S. manufacturing operations as well as unfavorable mix from lower drug delivery revenue. Operating expenses were slightly above our expectations to support higher than expected revenue and were higher than Q1 of last year as we further invested in our business. Adjusted operating margin and adjusted EBITDA were 5.5% and 13.6% respectively. Both exclude the favorable medical device correction adjustment of $8 million and both were above our expectations due to a higher than anticipated revenue. Turning to cash and liquidity. We ended the quarter with over $620 million in cash and the full $100 million available under our credit facility. Our financial position remains strong and offers us the flexibility to strategically invest in our business, further strengthen our innovation pipeline and deliver growth for years to come. Now turning to our 2023 outlook. For the full year, we are raising our expectation for total Omnipod revenue growth to a range of 21% to 25% and total company revenue growth to 18% to 22%. For U.S. Omnipod, we’re increasing our revenue growth outlook to 27% to 31% driven by continued strong Omnipod 5 adoption coming from both new customer starts and ongoing conversions from other Omnipod products, as well as recurring revenue from Omnipod DASH and the benefits of our pay-as-you-go model. We continue to expect the cadence of our revenue growth to be weighted more to the first half of the year, given a tougher comparison in the second half of the year, resulting from the Omnipod 5 full market release in the U.S. in August of 2022. This includes the related volume benefit from the accelerated pace of customer conversions in the second half of 2022. For international Omnipod, we are reaffirming expected revenue growth of 6% to 10%. On a reported basis, we now estimate a favorable foreign currency impact of approximately 200 basis points. Growth will be driven by ongoing Omnipod DASH adoption, partially offset by AID competitive headwinds. As a reminder, given the nature of our annuity model, we are not expecting a material contribution from Omnipod 5 in our international markets in 2023. Lastly, for drug delivery, we continue to expect a decline of 55% to 45% representing a dollar decline, similar to what we experienced in 2022. Turning to 2023 gross margin. Excluding the impact of the voluntary medical device correction, we continue to expect gross margins to be in the range of 65% to 66% consistent with 2022 at the high end. Favorable impacts this year include the benefit of increasing volume in the U.S. pharmacy channel, favorable geographical sales mix and manufacturing improvements. These drivers will be offset by higher costs associated with our U.S. manufacturing ramp, product line mix due to increasing Omnipod 5 volume and inflation. As we’ve said before, we expect many of these factors to impact our results into 2024. We expect Q2 gross margin to be near the low end of the range and the second half of the year to be closer to the high end of the range. This improvement will be driven by increasing volume in the pharmacy channel and improving manufacturing performance. We continue to expect operating expenses to rise due to investments in our sales and marketing efforts, including the phase launch of Omnipod 5 in our international markets, as well as expanding our innovation pipeline and clinical efforts and scaling our support functions. We continue to expect adjusted operating margin to be in the high single digits similar to 2022 levels. We also expect improvement in the second half of the year over the first half due to the timing of investments and improving second half gross margins. We remain committed to margin expansion and expect to begin to leverage investments in 2024 and beyond. We continue to expect capital expenditures to be at a lower level than 2022. Turning to our second quarter 2023 revenue guidance. We expect total Omnipod growth of 29% to 32% and total company growth of 27% to 30%. For U.S. Omnipod, we expect growth of 37% to 40%. Our growth drivers remain the same. The ongoing adoption of Omnipod 5, including the benefits of the U.S. pharmacy channel and our continued strong new customer starts as well as the benefits of our annuity model. For international Omnipod, we expect growth of 13% to 16% driven by ongoing Omnipod DASH adoption, partially offset by AID competitive headwinds. On a reported basis, we estimate a favorable foreign exchange impact of approximately 100 basis points. Finally, we expect a Q1 drug delivery revenue decline of 25% to 20%. In conclusion, we are on track to deliver another strong year of financial results and operational performance. We achieved a number of milestones this past quarter and are incredibly excited about the year ahead and the opportunities we see to further our mission, improve our customers’ lives and drive value for shareholders. With that, operator, please open the call for questions.

Thank you. Our first question comes from Jeff Johnson from Baird. Please go ahead. Your line is open.

Thank you. Good afternoon guys, and congratulations on the quarter. Bret, we’ll miss talking to you at the meetings, so good luck in your next endeavors. Jim or maybe Wayde, I wanted to look at your international guidance for 2Q. I’m sure there’s a lot of questions we could ask about the strength in the U.S. for Omnipod 5. But that 13% to 16% growth, it’s about 400 basis points to 500 basis points above where the Street is sitting for 2Q. Obviously, you talked about some increased AID adoption that we all know is going on over there. We’re seeing you talked about the increased attrition. It’s hard for me to reconcile the strength you’re expecting in 2Q and even over the balance of the year there if Omnipod 5 is not going to contribute a lot, so what’s going right in the international business? And how are you accelerating that growth given some of those attrition and competitive factors you talked about? Thanks.

Yes. Hey, Jeff. We would love to start talking about Omnipod 5, but why don’t we go ahead and talk about international for a second. So as you point out, we had a strong Q1 at 10%, and that’s about what we’ve been performing over the last couple years. 11%, 12% performance over the last couple years, 10% Q1. Q2 does look a little higher, but it’s more just some of the choppiness that we see in the international markets due to the distributor nature. And so we do have a bit of a higher growth rate that we’re planning based on some of the order timing there. If you look at the second half growth rate, it offsets it, and then it looks to drive us in for the full year around the 6% to 10% or just double digits at the high end. And we’ve been performing at that level for the last couple years. We think we can continue to drive that at the high end. Really depends on how the second half performance goes. And as you know, we’re not participating in the AID portion of the market internationally. And so right now, DASH is doing really, really well. Without an AID system, we’re still growing double digits internationally. And as you know, we can’t wait to bring Omnipod 5 first to the UK mid-year and then Germany now in the fall, and then to further countries next year. And so we think we’ll significantly improve our performance even above the double digits we’re at now once we get Omnipod 5 and our AID system into that market.

Our next question comes from Larry Biegelsen from Wells Fargo Securities. Please go ahead. Your line is open.

Good afternoon. Thanks for taking the question. Jim, I can’t help but ask about your congrats on a really good quarter here. I can’t help but ask about the comment you made about over 70% penetration of pumps in the type one population. I guess, could you put some timing around that? What do you think needs to get done to make pumps standard of care? It has moved relatively slowly and it is interesting to see that your 80/20 split has gone to 70/30 with Omnipod 5, which suggests that a higher proportion are coming from competitive pumps? Thanks for taking the question.

Thanks, Larry. Thanks for your congrats on the quarter. We’re very happy with the quarter too. Yes, I think the key point, we don’t have a timeframe on that overall pump penetration. I think the key point we’re trying to make is that Omnipod 5, the Omnipod platform and especially Omnipod 5 are fundamentally different and better from tube pump offerings that were first introduced into the market. And because of that, they’re so simple to use that as the market goes through a learning curve, we firmly believe we’re seeing hints of it all right, right now already, and we firmly believe that more and more people will both consider using a pump, a wearable pump, and more and more doctors will consider putting patients onto an Omnipod 5 platform product that they wouldn’t have considered a year ago. It’s just because the ease of use is so high effect. If we go back to ADA last year, one of our investigators finished his talk about Omnipod with the statement that given this offering, it’s now the case that everybody in the market should be considered for pump therapy. And so we think that those penetration models, which everybody has been talking about and bouncing around numbers for quite a long time, are really obsolete. We think that Omnipod 5 is going to bring more and more people to market. That’s going to be true in type one where CGM is already very well penetrated and has paved the road for us. We think it’ll be even truer for us in the type two market because people with type two diabetes have such a burden in managing their disease. It’s very difficult for them to get approved for insulin pumps. It’s very difficult for them to manage everything they’re doing along with the tube insulin pump. We think the simplicity of Omnipod 5 is going to drive penetration in that market as well. We see it as a huge opportunity.

Our next question comes from Robbie Marcus from JPMorgan. Please go ahead. Your line is open.

Oh, great. And congrats on a really nice quarter. For my question, Omnipod 5 is clearly doing great. It’s taken share, record new patients in a first quarter, just below a fantastic fourth quarter. So I think the current momentum isn’t in question here, but as we look forward, you are having guidance growth slowing a bit, really wanted to get your sense on how you think about balancing, bringing in those new patients that are not using a pump right now versus some competitive entrance, particularly Medtronic 780G and Tandem’s Mobi that’s coming later this year. And how you think the trajectory of new patient ads can continue not just in the short term, but over the next, let’s say five years or so? Thanks.

Thanks, Robbie. We’re really bullish on the coming five years for our business and for our growth trajectory. And the mix of the – mix of patients for us MDI versus competitor has moved a little bit in the quarter and that sort of thing. I’ll just say a couple of things. The first one is we have the best offer on the market. So if you’re just thinking competitive, sort of the three main competitors in the market. Our offering is clearly superior. We’re clearly winning in the market right now. We’re taking – we’re bringing a lot of people out of MDI into the market, and we’re taking competitive share and driving competitive switching, which continues to run ahead of our historic pattern and ahead of frankly our expectations and in terms of competitive switching. But we don’t think about the market that way. The way we think about the market is not as a zero-sum game amongst the pump players. We think of the market as a market with literally tens of millions of people that need insulin therapy that need a much simpler solution. And so our entire offer is geared to bring people off of multiple daily injections and all of the burden of multiple daily injections into a simple wearable, disposable, waterproof pump. That requires them to not have to do a lot of calculations, don’t do finger sticks and just manage their condition that way. And so we’re extremely bullish. We have a very clear lead on the whole package. We have a fantastic algorithm. And the whole package for Omnipod 5 is so simple. The wear experience is simple. The channel access is simple. The economics are great for patients. The economics are great for payers. So overall, we’re extremely bullish on the ongoing growth. And given our lead, we’re just going to extend that lead. We have tons of innovation coming in the pipeline and our reorganization is going to allow us to move even faster with that. So we think our – we love the momentum we have right now. We intend to continue it, and we think the midterm, long-term outlook is really, really strong for us.

Our next question comes from Joanne Wuensch from Citibank. Please go ahead. Your line is open.

Thank you very much for taking the question. Two questions. How should we think about drug delivery over time? Does this essentially go to zero? And then the second question is, ADA is coming up. What should we be looking forward to? Thank you.

Thanks, Joanne. I'll take a shot at both of those, but I'll invite either Wayde or Bret to comment and give some color. So, first one, on drug delivery, look, we – that's been a great business for us. It's because – as we grow, as Omnipod 5 grows in particular, it's becoming less and less material for us. And – but we've really enjoyed delivering that product to our partner at Amgen. And we know that product makes a difference in people's lives in that therapy area. That business is lumpy for us and has been. And so, we expect that to continue to decline. I don't know, Wayde, if we're going to guide on it dropping to zero, we expect some revenues and we've made some progress there, so I'll turn that to Wayde. But first let me comment on ADA. Yes, we're excited about ADA. ADA is in San Diego this year. I think you all know that. I'm based in San Diego, so it's right here in my backyard. Very excited for it to be here. We will be bringing more real-world evidence publications to ADA. We'll be showing some real-world evidence around type one usage. We'll be showing some real-world evidence around type two usage. We're really excited to build on what we showed at ATTD this year. And as I've said in the past, and you've heard us say in the past, we think that the cloud connectivity of Omnipod 5 puts us in a unique position to be able to have insights into real usage cases across the population of people using the Omnipod 5 pump. So we'll be showing more exciting data at ADA, and we hope you'll come and see us. Wayde?

So just, Jim covered it really well. I'll just add quickly on the drug delivery side of things. We have a great partnership with Amgen, and we're very proud of the fact that our technology combined with their product has really helped them continue to sell their product and defend against biosimilars given our delivery device. And so we do think it's going to have a long tail, Joanne, we would expect it to be several years, if not five or more years, that will continue to provide the product for them. We're not going to guide, as Jim said, it's a lumpy business just based on the order patterns. But we think we'll continue to provide that product. The overall strategy for the drug delivery business has not changed for us, although there are many growth options for us there. We are laser-focused on the diabetes side of the business. And we've got so many investment opportunities to grow the diabetes side of the business and invest and create value that we are just not turning our focus to drug delivery at this time. But it still remains as growth options for us out there in the future.

Our next question comes from Margaret Kaczor from William Blair. Please go ahead. Your line is open.

Hey, good afternoon, everyone. Thanks for taking the question. I wanted to follow up on Larry's question and maybe push a little bit more on that 70% plus market penetration. But maybe tie it to some of the comments around the organizational change. First of all, Bret, congratulations on everything you've accomplished. It's been awesome working with you. And hopefully, our paths cross again, but you deserve everything that you've done. But maybe as we think about kind of that market penetration, there's a lot of T1D patients that maybe don't routinely go to an endo. You talked about getting closer to the patient. I think you talked about both regional, local offices. But Jim, you're a strategist. I've seen your work. So is this a commercial effort to try to get into the PCPs? Is there a more virtual way of doing that? How are you guys thinking about it as you think about that 70%? Thanks.

Thanks, Margaret, for the question. It's a great question. We think – first thing I'll say is it's – the logic of it is such that, right. So to me, the Omnipod 5 offering is just so compelling that – and what we see when we have patient feedback is the ease of usage is so high, and we get these messages from patients literally every day. And we think it's just – there's a compelling logic for people to be using Omnipod 5 instead of MDI. And it's a better life experience. It's better outcomes with MDI. And so just on the weight of that, it's really important. I'll point out that there are many endo practices right now, where more than 70% of their type 1 users are on a pump, and most of them are on Omnipod 5, right. And so Omnipod 5 has allowed them to bring more of their patients on to Omnipod 5 therapy. And so we see that playing out. But if I just pick up on the other side of your question, which is around channel, a couple of things that I think are just really powerful for us. So the first one is we certainly know, we know that there are PCPs out there who already are heavy writers, obviously have a big part of their focus on treating people with insulin therapy, treating people with diabetes. We have those mapped. We periodically call on them. With Omnipod GO, that's going to be an even more important part of our business. And part of what we'll be doing as we do commercial pilots is figuring out the mix of how we call on those kind of 'high writers' in the PCP market. But Omnipod 5's simplicity will also help PCPs feel comfort in writing. And we're seeing an expansion of people who write prescriptions for Omnipod 5. So just – just put some numbers to that. We've said – you've heard us say before that physicians are increasingly comfortable with writing prescriptions for Omnipod 5, and we've seen that learning curve go through the market. In this quarter, we had more than 11,000 health care practitioners who wrote a script for Omnipod 5. And that's in a market where there are just about 7,000 endocrinologists out in the market. So more than 11,000 people writing for Omnipod 5. So we see a lot of evidence that we're going to be able to do exactly what we set out to do as a company when we founded it, which is bring a simple, really simplifying offer broadly to the market that's easy for patients to use and easy for physicians to prescribe and easy for people to get access to and get set up on. So we're very bullish on driving more and more penetration, bringing more people in the market. Our play is a growth play. It's not a competitive switching play. And I think that's really important.

Our next question comes from Matthew O'Brien from Piper Sandler. Please go ahead. Your line is open.

Good afternoon. Thanks for taking my question. I would just love to hear a little bit more about integrating with G7 and Libre 2 and 3, just general thoughts on timing there. Do you think you'll be second in the AID market with both of those new CGM products? And then any kind of commentary just as far as what opportunity you see with accessing Libre patients. To me, it seems most likely that they would probably go with O5 if they do decide to go on a pump. Just any kind of general commentary there would be helpful. Thank you.

Thanks, Matt. We continue to work really closely with both Dexcom and Abbott, our two great CGM partners. We're really pleased to see their continued technology advancements in the market. We were excited to see G7 approved earlier in the year. And as we said and as I said in our prepared comments, we congratulate Abbott on getting both Libre 2 and Libre 3 cleared as iCGM. That's a big accomplishment. So we're very excited to bring sensors of choice to all of our customers as soon as we can. We're making great progress with both partners on completing those integrations. We haven't guided on timing. I'm not going to speak to what our competitors are going to do, but we're moving as fast as we can. And we're excited to bring those innovations to market just as quickly as we can. In terms of – there's – you've got two big players out there. So your question about penetration in different sensors and who will choose what, we think Omnipod 5 is the best offer in the market. We think it's going to be the best offer for anybody wearing any sensor, which is why we want to bring choice to all of those customers and all of those patients. It's obvious that between those two players, they have millions of patients out there that are already using their sensors. And for us, that creates a kind of a – I think I've said – I've used this metaphor before on these calls. I used to go fishing with my dad. He would always say, well, let's go to the pond that they just stocked with the trout. So as we get out there, we're fishing in a stocked pond. And so they've been paving the road for us. There's lots and lots of patients out there that both of our partners are delivering terrific, wearable on-body experiences in managing their diabetes. And we think that Omnipod 5 will very seamlessly slide into that on-body experience and provide great solutions to people wearing both Dexcom and Libre sensors.

Our next question comes from Travis Steed from Bank of America. Please go ahead. Your line is open.

Hey, thanks for the question and congrats on the quarter. Maybe a quick clarification for Wayde. I wanted to make sure we had the numbers right on the stock, destock this quarter. It looks like the net impact would have been a negative $2 million headwind, so U.S. growth, 50% in Q1. So I wanted to make sure I had those numbers right. And then the question is really on the guide up in Q2. I don't know if that's what you're seeing in April if it's really the strong Q1 you that had. And then – and how to think about the second half because it looks like the second half guide is about mid-teens growth, which looks conservative at this point. I just want to make sure I understand the flow of the year for the U.S. growth.

Hey Travis, yes. I'm glad you asked because we do have these dynamics with Omnipod 5 as we ramp up. And as you know, we haven't annualized yet. This is just our third quarter ramping with Omnipod 5. And so it does cause some unique dynamics. And we experienced similar stocking. Majority of the $14 million we called out is due to our existing – moving from either Classic Omnipod or DASH onto our new Omnipod 5 system. And when they do that, some customers will get their starter kit and their first reorder in the pharmacy and that creates a one-time volume benefit. We also benefit from new customers who have that same dynamic and then, to a much lesser extent, a small build in the retail pharmacies as retail pharmacies start to stock Omnipod 5 as their foot traffic increases with the rollout. What – so that ended up with $14 million, which is very similar to the $16 million and the $15 million we've had in the last two quarters. What was unique this quarter and added to that, that resulted in a net small headwind, as you mentioned, a $2 million headwind, was the return reserve that we had to put up. So this is a new dynamic for us as the pharmacy channels are switching over from DASH and Classic Omnipod to Omnipod 5, and they're doing it at such an accelerated rate that they have the contractual right to return to us the prior products. And so we set up a reserve. We saw that increase here in Q1. So a portion of that is actuals in the quarter. The rest is a reserve for what we estimate to come throughout the rest of the year. So those are the major drivers for us, including a days-on-hand decrease. And this is for the Omnipod 5 business. And of course, we don't control the inventory levels at our wholesalers. And their inventory goes up and down from time to time. Just a reminder that in Q2 of last year, we saw a $7 million channel increase for Omnipod 5. So in some respects, this is just giving that back and leveling out the channel here. It took a few quarters for that to happen. So we're going to keep a close eye on it, but we want to make sure whenever we see a change, a material change in days on hand, we call it out for you all. And then in reference to the guide, Travis, we do see really strong momentum. We've set record new customer starts in the U.S. for multiple quarters. And so that's what gives us confidence in raising the growth rate for Q2. And then comparatively, when you're looking at first half to second half growth percentages, the second half is when we annualize Omnipod 5 from the prior year. And so it's a much tougher comp. And then inside of that, we have our remaining customers converting from Classic and DASH to Omnipod 5, which will start to ramp down in the second half of this year, and we think we'll be through most of the eligible customers to convert. And so we won't get as much benefit in the second half of this year as we did in the second half of last year. And so that compounds the tough comp a bit. But if you're looking at the pure growth rates on an extrapolated basis, for the U.S., we're looking at the second half in – at the high end, over 20%, low 20s growth rate at the high end. And so that's what we're focused on, continuing to drive the business, even with a tougher comp, well over 20%. And so that's the major dynamics. We've got plenty of year to go yet. So we increased the second half growth rate because we've got good line of sight to that given our annuity model. We're going to continue to monitor the second half, and we'll provide further updates as we go throughout the year.

Our next question comes from Chris Pasquale from Nephron. Please go ahead. Your line is open.

Thanks. Congrats on the quarter. I wanted to spend a minute on Omnipod GO and the path forward there. Can you walk us through some of the key milestones between now and when you think it will be ready for a commercial launch? And in particular, I'm curious about coverage and market access because I know you've highlighted those as gating factors before. So are there some studies you want to run? Or anything else that's going to get done this year to get you ready for next year? Thanks.

Thanks, Chris. Obviously, we received clearance for Omnipod GO, which is one of the poles in the tent. We're really excited to get that in such an expeditious way. It's terrific. There's other things that we need to get in place to make sure that we can launch at scale. As you said, one of the main ones is reimbursement. And so we announced when we filed Omnipod GO, actually, if you guys remember just before we filed Omnipod GO, because we wanted to be able to go to payers and start to talk about coverage. And those conversations are going, they're going pretty well. And we expect to be able to have broad enough coverage to launch certainly in 2024. And then the other things we have to figure out is Omnipod GO is a new-to-world offer. So it's in the Omnipod product form factor, but it has no controller, it doesn't take a CGM feed. So it's very, very simple to use. It's a multiple SKU product because each SKU will have a basal rate associated with it. So the way we've designed it is a physician would write a prescription for Omnipod GO 10 units or something very simple like that. But we need to go out and make sure that the customer experience is – we fully understand the customer experience of getting that new-to-world product, and we fully understand the physician experience of writing it and making sure there's appropriate access for everybody. So we'll be doing some pilots to test out those models, to test market reaction and test customer experience and so on. And when we're confident we have those right, we'll move to a commercial launch. We're not gating them on a date. We're not holding back the date. We want to make sure we're ready to launch the experience that we want to deliver to all of our customers, including both patients and health care providers. And we're moving pretty quickly, so we'll move as quickly as we can, but we're going to continue to guide to 2024.

Our next question comes from Kyle Rose from Canaccord Genuity. Please go ahead. Your line is open.

Hi. This is Caitlin on for Kyle. Congrats on a great quarter. Just to kind of go off of the GO question earlier, have you begun enrollment on the T2 pivotal study? And can you kind of remind us of the timelines for the study? And then U.S. customer starts coming from Q2, where do you really think this could go in the future as you kind of gear up GO in the longer term? Thanks.

Thanks, Caitlin. The Omnipod 5 type 2 pivotal is going really well. And just as a reminder, I think we said in the comments, too, today that it's intended to be up to 350 patients across 20 sites in the U.S. And we're already enrolling that, and enrollment is going really well. We have both patients and investigators are really keen to be in that study. And so enrollment is going really, really well. We're really excited about it. And we haven't put a timeline on it for everybody, but I'm sure everybody understands what happens is we have to – that's a 90 day – every patient is in the trial for 90 days. So you enroll the patients. Each patient stays in the trial for 90 days, and so there’s a rolling cadence of the patients being in the trial, then the last patient completes, then you gather the data, then you clean the data, then you analyze the data, and then when that’s ready, we send it into the hands of the FDA. So there’s multiple steps we have to go through. We haven’t put a timeline on that. But we’re very confident first that it’s moving pretty quickly. And second, we’re really confident in the results. You’re doing a trial because you have to get the results to finish the trial. But we know from our feasibility study that we published last year that the results for Omnipod 5 for people with type 2 are terrific, really terrific time in range and significant reduction in actual daily dose of insulin, which is a benefit both to patients and to payers. So we’re very bullish on that. The overall – when you think about the overall landscape, we’re already the leader in type 2 with DASH. We continue to have and enjoy a lot of new customer starts. As a percentage of our new customer starts, most of those are coming onto DASH because that’s where we have an indication for use. So we’re already the market leader in insulin pump therapy with Omnipod DASH. We know we’re getting off-label usage right now for people with type 2 diabetes using Omnipod 5. We don’t promote Omnipod 5 for people with type 2 diabetes, but physicians write it, physicians prescribe it. And so we know we’re seeing that already, which is also an early indication of success for us and we really would love to be able to promote it, which is why we want to get the indication for use. And then Omnipod GO is upstream of intensive insulin therapy. So Omnipod GO is designed to really simplify management of their condition for people with type 2 diabetes who are on basal only, which is how most people in the U.S. initiate insulin therapy on a basal rate. So by launching Omnipod GO, we move upstream. We simplified basal rate insulin therapy for people initiating, and then as their needs progress, they’re already used to the Omnipod form factor, how to put on a patch, how to use an Omnipod product. And when they need intensive insulin therapy, we anticipate it being very seamless for them to slide onto. If it’s going to happen tomorrow, it would be on to DASH, but the timing will probably be such that most of those patients will be progressing onto an Omnipod 5 product once it gets its indication for use. So we think we have a terrific portfolio of offerings already in type 2 and we’re really excited to continue to drive growth in that market and drive solutions for people living with type 2 diabetes.

Our next question comes from Jayson Bedford from Raymond James. Please go ahead. Your line is open.

Hi. Good afternoon. I’ll be quick here. On the RCT, you mentioned that it would support premium pricing. I just wanted to clarify is that premium pricing relative to tube pumps or premium pricing relative to your current offering in Europe?

Thanks, Jayson. Our intent is to deliver enough evidence into various markets such that we can go and secure reimbursement that we think is more in line with the value that we deliver with Omnipod 5. We think Omnipod 5 delivers a lot of value through its improved patient experience and improved outcomes. And so – and those negotiations are going and will go market by market. And so I think that what you’ll see is we’ll probably have slightly different reimbursements and slightly different levels of premium in any given market depending on what we’re able to prove to those state payers and what we’re able to negotiate over time. We may be also able to ramp reimbursement over time as we’re able to deliver more evidence. But as we’re entering into those conversations, we want to have as much evidence as we possibly can, which is the purpose of that RCT. And as a reminder on that one, it’s a two geography study, it’s U.S. and France. The U.S. – the last U.S. patient is completed. We have about 75% enrolled patients in France, and we expect that to wrap up in the fall. And then we’ll have that as another era in our quiver of evidence as we go and talk to those payers to secure the – what we think is fair reimbursement for the value Omnipod 5 creates.

Our next question comes from Matthew Taylor from Jefferies. Please go ahead. Your line is open.

Hi. Thanks for taking the question. So I wanted to go back to your comment on the penetration rate, potentially going through 70%, given all your advantages. I wouldn’t dispute that, but you made some interesting comments that you’re starting to kind of see the green shoots of that. And so my question on the follow-up there is what kind of rate of change are you seeing or do you think that we could see driven versus the traditional 75,000 or so MDIs coming to market converting to pump every year in the U.S.? Any thoughts on that?

Matt, it’s Wayde. Happy to take that and I think Jim covered it well, but maybe just a couple things I could add to that. I think as Jim said, one of the best indicators we have is that there are some type 1 endocrinologists that already have more than 70% of their type 1s on a pump. So that’s a clear early indicator. One of the other things we’re looking at is the pediatric penetration rate, which is much higher than the adult penetration rate, already in excess of 50%. And so that tells us that as the population ages over time, we’re already seeing a higher penetration rate out of the pediatric space. So it’ll just be a natural increase in penetration as the population of people on pumps increases. And of course, we’re the market leader in pumps and really driving that early penetration rate for type 1s. And so the rate of change, I think is a great question that you have. It’s going to be interesting to see how the market curve develops here. But just one other thing I would add, Jim mentioned that we’re bringing – we’ve got a chock-full list of innovations to bring to market. This early indicator where we see some clinics already over 70%, and that’s before we bring CGM of choice, before we bring iOS, before we bring software and hardware improvements over time. And the competition is also improving their products over time. And so I think between all of us, we’re going to bring great technology for people with diabetes and for our customers here and just going to have much better technology solutions for delivery of insulin. And so that’s what gives us the confidence that we can take this to 70% and above over time. But it’s a great question on the rate of change. We’ll see how that market develops. The good news is we have many other growth platforms, obviously our leadership position in type 2 in the U.S. and then our international expansion plans and bringing our Omnipod 5 AID system to international markets, and then of course, expanding our offerings with Omnipod GO in the basal only market. So, lots to get excited about with our innovation pipeline today.

Our next question comes from Steven Lichtman from Oppenheimer. Please go ahead. Your line is open.

Thank you. Hi guys, and congratulations. Wayde, just thinking on gross margin, obviously a lot of moving parts here and you talked to some of that falling into 2024. But thinking over the medium to long term, just given some of the work you’re doing in expansion in Malaysia, how are you thinking about leveraging that line as you look out over that medium term? How much does international offset that? Just trying to think through the cadence over the next three to five years. Thanks.

Yes, Steven great question to think down the P&L as well. We’ve got a lot of momentum on the top line and we think that we’re going to be adding significant value with gross margin and operating margin expansion over time. Focusing here on the gross margin, and to your question, medium to long-term, we’re not putting numbers on it, but we know we’ve got a lot of tailwinds. We’re not assuming the component higher inflationary costs to improve, but we’re also not assuming they get worse from here. We’re assuming they’ve sort of leveled out and that’s what we’re going to live with for some time. And so assuming the inflationary environment then stays flat for us, the built-in benefits that we have with scaling the business, additional volume and the move, the geographic mix of growing the U.S. faster as well as the move into the pharmacy channel is all going to provide us some tailwinds to gross margin. The other side of the coin, what we have to watch is how fast we expand internationally. And just given that we use a distributor model there, our gross margins are sometimes lower. That doesn’t mean our operating margins are lower because we obviously have a lower cost to serve where we use the distributor market there. And so it’s going to be a combination of those things, but we’re not going to put numbers to long-term guidance at this point, but we do think we can continue to grow gross margins over time. And we’ve had a long-term goal of getting to 70%. We still think that’s in view over the medium horizon here. But we just have to manage all of these dynamics continue to improve our manufacturing performance, which is also another driver for us. And that’s going to help us work our way to 70% over time.

We have time for one last question. It will come from Marie Thibault from BTIG. Please go ahead. Your line is open.

Good afternoon, everyone. This is Sam Eiber on for Marie. Thanks for taking the questions here and congrats on a nice quarter. Maybe I can just ask on OUS, so we’re gearing up for initial market introduction in the UK in the next couple months or so. I guess any other work that’s needed in terms of developing that cloud infrastructure and you mentioned some market preparation. Any more details in terms of what that looks like going on now ahead of some of those launches? Thanks for taking the questions.

Thanks, Sam. We’re really pleased. We’re very excited to be bringing Omnipod 5 to the UK and Germany this year. Obviously, since we’re really late in stage and readiness there and we’re all ready to launch those products, the cloud infrastructure and those markets is completely ready to go. And we’re training healthcare practitioners right now and our teams are really excited to launch. So we’ll be doing those, as we said in the summer and then – summer in the UK and then fall in Germany. There is some work to do. The cloud infrastructure is scalable and so we’re in good position in terms of how we’re building that cloud across Europe. There is some specific work market by market to be done. Sometimes it’s technical, sometimes it’s agreement based because the regulations by market are a little bit different in terms of data privacy and security. And the channels are a little bit different. And so you are – as you step into a market, you’re launching a cloud-based offering, you might have a different agreement with a different hospital system, things like that, that have to be worked through. So those are really the steps that we have to do. But we’re excited to get those launches going in Europe and then really excited to continue to cascade across the international geographies in 2024.

This concludes our Q&A section. I would like to turn the conference back to Jim Hollingshead.

Great. Thank you everybody. Thanks again for joining us today. Obviously we’re thrilled with our start in 2023 and we’re focused on sustaining that momentum for our entire business both for the rest of the year and beyond. The future for Insulet has never looked brighter, and the future for people with diabetes is incredibly bright. We look forward to continuing to update you on our progress over the year and next quarter. We’ll see you then. Thanks.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and have a wonderful day.