Good afternoon, ladies and gentlemen, and welcome to the Insulet Corporation First Quarter 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, June Lazaroff, Senior Director, Investor Relations.

Good afternoon, and thank you for joining Insulet's First Quarter 2025 Earnings Call. I would like to welcome Tim Scannell, Chair of our Board of Directors, to our call, as well as Ashley McEvoy, our new President and Chief Executive Officer. Joining Ashley is Ana Maria Chadwick, Chief Financial Officer and Treasurer. Also joining us for the Q&A portion of today's call is Eric Benjamin, Chief Product and Customer Experience Officer. Both the replay of this call and the press release with our quarterly results and guidance will be available on the Investor Relations section of our website. Also on our website is a supplemental earnings presentation. We encourage you to reference that document for a summary of key metrics and business updates. Before we begin, we remind you that certain statements made by Insulet during the course of this call may be forward-looking and could materially differ from current expectations. Please refer to the cautionary statements in our SEC filings for a detailed explanation of the inherent limitations of such statements. We will also discuss non-GAAP financial measures with respect to our performance, including adjusted operating income, EBITDA, adjusted tax rate, and constant currency revenue, which is revenue growth excluding the effect of foreign exchange. These measures align with what management uses as supplemental measures in assessing our performance from period to period, and we believe they are helpful for others as well. Additionally, unless otherwise stated, all financial commentary regarding dollar and percentage changes will be on a year-over-year reported basis, with the exception of revenue growth rates, which are on a year-over-year constant currency basis. With that, I will turn the call over to Tim Scannell, Chair of the Board of Directors.

Thank you, and good afternoon, everyone. It is a pleasure to join today's call and share our excitement at the Board level for welcoming Ashley McEvoy to Insulet as President and CEO. I would also like to thank Jim Hollingshead for his leadership of the company over recent years. Ashley is a battle-tested operator who comes to Insulet with a track record of driving durable growth and value creation in market-leading businesses. She brings over 15 years of leadership experience at scaled consumer franchises complemented by more than a decade in senior leadership roles at Johnson & Johnson, where she successfully restored five multibillion-dollar global businesses to above-market revenue growth and competitive margins. Ashley brings an exceptional combination of strategic vision and operational discipline to Insulet. She understands what it takes to lead at scale and do it with speed, accountability, and a relentless focus on execution. We appreciate that this transition has raised some questions regarding timing, but we are extremely confident that now is the right time for Insulet, positioned for substantial further growth into type 1, type 2, and international markets, to bring her leadership to the company. The Insulet team is already executing well, as demonstrated by our recent results and the guidance raised today. Moving forward, Ashley and the Insulet leadership team have the Board's full support and confidence to continue driving the company's strategy to lead with differentiated technology and improve the lives of more people with diabetes globally. We believe Ashley's leadership will ensure we continue to execute on that strategy, drive performance at global scale, and deliver value across our team, partners, customers, and shareholders. We are proud of Insulet's success and performance over time, and we look forward to supporting Ashley's leadership success during Insulet's next phase of growth. With that, I will turn the call over to Ashley.

Thank you, Tim, and good afternoon, everyone. Let me start by extending my gratitude, especially to our team for the warm welcome. I'm thrilled and honored to join you today on my first earnings call as the new President and CEO of Insulet. I want to share with you my excitement for this opportunity as well as my background and leadership philosophy to drive Insulet to its next chapter of growth and innovation. What excites me most about Insulet is its unique position at the intersection of Consumer Health and MedTech. I come to this business as a seasoned operator with a passion for growing businesses in both the consumer and health care sectors. I have a deep appreciation for the consumers' increasing role in health care decisions, which is especially relevant to a wearable technology like Omnipod. What excites me about MedTech today is the incredible progress and innovation towards smarter, less invasive, and more personalized solutions. We're witnessing a shift where technology is improving clinical outcomes and reshaping the patient experience to become more intuitive and effortless. I also have a passion for scaling businesses, not just in terms of financial performance, but with a relentless focus on growth, innovation, and people. That's what makes this space so energizing. The opportunity to build something that matters and to do it in a way that meets the evolving expectations of patients, providers, and the broader health care ecosystem. Taking Insulet from $2 billion in revenue and 500,000 global patients to a substantially greater impact will all be about our people, our culture, our innovation agenda, and our capabilities. Developing a portfolio roadmap, making strategic capital allocations, and executing on our plan will be particularly important as we continue growing within the type 1 market, expand our new type 2 indication, and advance globalization. I look forward to working with the team to strengthen our business practices, ensuring that we operate with the agility and sophistication required of a world-class leader while maintaining our entrepreneurial spirit and ingenuity. We are already a pioneer in advanced automation. There's even more work we can do to invest in and optimize our capabilities globally. Further, we will sharpen our focus on brand activation and direct-to-consumer strategies, leveraging the power of Omnipod to reach both health care professionals and patients directly. We'll also harness our unique wealth of data, with over 365,000 customers cloud connected today, to improve the prescriber and patient experience with Omnipod as we work to improve engagement, retention, and outcomes. My leadership philosophy is really centered on three pillars; purpose, people, and performance. I believe that living our purpose, which is profoundly impactful here at Insulet, serving people within the diabetes community, is vital. By empowering our people further, we will deliver superior results. Insulet is already a standout success story. We are one of the fastest-growing businesses in MedTech, increasingly profitable, and delivering positive free cash flow. This success is driven by winning technology and continued investment in market-leading innovation. With significant tailwinds at our back, now is the time to envision what it will take to expand from a MedTech platform with the emerging global strategy into a durable world leader in diabetes management, an engine of profitable growth and cash generation at scale. I plan to dive into our drivers and strategy with the support of our team and Board of Directors over the coming weeks and months. In the meantime, I can assure you that our strategic priorities, primarily to advance innovation, drive strong growth in the U.S. type 1 and type 2 populations, and expand internationally, are fully intact. As Ana will discuss shortly, we are executing as well as ever, evidenced by 30% growth in the first quarter and a strong set of catalysts ahead as we bring Omnipod 5 to more lives globally. We look forward to giving you a more specific sense of our multi-year roadmap during Investor Day when the time is right. For now, my focus will be on learning the fundamental building blocks of this business. I'm energized by the strength of Insulet's strategy and the power of our differentiated technology, and just two weeks in, I've hit the ground running with our passionate, talented team. I plan to spend more time with our people, our partners, our customers, and all of our folks on the manufacturing floor in the days and weeks ahead. I couldn't be more excited about this journey and the opportunity to share with all of you. With that, I will turn the call over to Ana to discuss first-quarter results and guidance.

Good afternoon. Before I get started, I would like to welcome Ashley to our team and thank Jim Hollingshead for his leadership over recent years. Turning to our first-quarter results. We entered the year with terrific momentum and are excited to see that continue. Our team did an outstanding job growing new customer starts on a year-over-year and sequential basis in both the U.S. and internationally. Additionally, within the U.S., new customer starts grew for both type 1 and type 2. In the first quarter, consistent with last quarter, over 85% of our U.S. new customer starts came from MDI. Also, over 30% of our U.S. new customer starts were type 2. This indicates the value and simplicity we bring to people living with diabetes. Revenue for the total company was $569 million, growing 30% over the prior year. This strong performance was driven by total Omnipod growth of 29%. On a reported basis, foreign currency had an unfavorable impact of 100 basis points. Our estimated global utilization remained stable compared to the prior year. Our annualized retention rate remained steady in the U.S. and improved slightly in our international markets, driven by the launch of Omnipod 5. Gross margin was an impressive 71.9%, and adjusted operating margin was 16.4%. I will provide further color on margin later in my remarks, but I'd like to take a moment now to discuss tariffs. As the market leader in automated insulin delivery with a global customer base of over 500,000, it is of utmost importance that we continue to provide product to our customers without interruption. We have invested over $1 billion in automation, engineering, quality management, and global facility expansion over the last decade. We now have manufacturing sites in the U.S., China, and Malaysia, forming a strong diversified position and resilient supply chain. Furthermore, we support the majority of our U.S. sales through our active Massachusetts facility as true pioneers in advanced automation. Given our actions and investments, along with the exemptions in place for certain medical devices, we are well-positioned to navigate these uncertain times and execute our plans while maintaining strong gross margins. Based on the latest announcements by the U.S. administration, we estimate an impact of approximately 50 basis points from tariffs to gross margin this year. However, given our unique strength, we are able to more than offset this impact through underlying scale and efficiency. In fact, we are raising our gross margin guidance today. I will provide further details shortly. Now, turning back to our first-quarter results. U.S. Omnipod revenue grew 26%, above the high end of our guidance range, driven by strong commercial execution as demand for Omnipod 5 continues to build. U.S. Omnipod revenue growth benefited by approximately 700 basis points from a prior year stocking dynamic, which we have discussed on previous calls. Partially offsetting that benefit was an approximate 450 basis point headwind related to the timing of rebates, which we had anticipated and expect to be neutral on a full-year basis. We continue to make great progress advancing the Omnipod 5 platform and brand through innovation and reach. In the U.S., we are seeing strong adoption of Omnipod 5 with Dexcom's G7 and early traction with Abbott's FreeStyle Libre 2 Plus sensors. We continue to receive positive feedback on the Omnipod 5 iOS app with G6. Over 40% of U.S. Omnipod 5 eligible customers are now using the iOS app as their preferred connected device, an increase from over 25% in the fourth quarter. Continuing our cascade of launches, we are now deploying a limited market release of iOS with G7, with the full market release expected before the end of the second quarter. We are seeing strong traction from our commercial investments in the U.S. and continue to make great progress on our expansion strategy. In the first quarter, we continued growing our sales force to engage more patients and prescribers as we augment our reach into type 2. We have filled all of our expanded sales roles and have trained over 90% of new hires. This team is hard at work to increase the number of U.S. HCPs engaging with type 2 patients and prescribing Omnipod 5 therapy. Today, nearly 25,000 U.S. HCPs are writing scripts for Omnipod 5, which is up over 20% from a year ago, and our team is just getting started. Additionally, we are advancing our direct-to-consumer efforts and driving higher customer conversion, bringing more people into our customer base who express interest in Omnipod 5. Now, turning to international. Our team delivered another outstanding quarter, achieving revenue 36% above the high end of our guidance. On a reported basis, foreign currency was an unfavorable 390 basis points over the prior year. International growth was primarily driven by strong demand for Omnipod 5 and customer base growth as we launched in additional markets. Recently, we launched OP5 in Canada and Switzerland, bringing the total number of international market launches to 13. We look forward to bringing Omnipod 5 to the Middle East. We're also advancing our sensor integration roadmap, beginning with the rollout of G7, now live in both the U.K. and The Netherlands, with more markets to come. In addition to our strong revenue growth, we delivered significant gross margin expansion in the first quarter. Gross margin was 71.9%, up 240 basis points, primarily driven by improved manufacturing and supply chain efficiencies and, to a lesser extent, volume. Operating expenses increased as we continue to invest in our business and pipeline of innovation. A few examples of our recent areas of investment and resulting success include the completion of our RADIANT study and its presentation at ATTD, ongoing enrollment in our STRIVE study, our work to advance sensor integrations, and the seamless expansion of our commercial team. We are also continuing to expand our platform through the limited market release of Omnipod Discover in the U.S. We are in the early stages of leveraging the power of our data to drive further ease of use, engagement, and retention. Our first-quarter adjusted operating margin was 16.4%, and adjusted EBITDA was 23.5%. Our team is executing well across our growth objectives and reinvestment plans, which have generated meaningful operating leverage. Our first-quarter non-GAAP adjusted tax rate was 22.6%. During the quarter, we took several steps to strengthen and de-risk our capital structure. We successfully issued $450 million in senior unsecured notes. We are using proceeds from these notes, along with cash on hand and proceeds from unwinding our cap call options, to pay off our convertible notes due in 2026. To date, we have extinguished $420 million of the convertible notes, and we expect to retire the remaining $380 million by the end of the year. During the quarter, we also upsized our revolving credit facility from $300 million to $500 million and extended the maturity from 2028 to 2030. These proactive and strategic actions improve our financial flexibility through greater access to liquidity and lowering our cost of capital. Turning to cash and liquidity, we ended the quarter with approximately $1.3 billion in cash and the full $500 million available under our credit facility. Now, turning to guidance. We are pleased to introduce strong second-quarter guidance and raised our outlook for the full year given the momentum across our business. Starting with our outlook for second-quarter revenue, we expect total company second-quarter growth of 23% to 26%, which aligns with our expected total Omnipod growth. As a reminder, our revenue growth guidance is on a constant currency basis. We assume a 100 basis point favorable impact from foreign currency to total revenue for the second quarter. For U.S. Omnipod, we expect second-quarter growth of 22% to 25%. For international Omnipod, we expect second-quarter growth of 27% to 30%. On a reported basis, we now assume a favorable foreign currency impact of 500 basis points. Turning to our full-year 2025 outlook, we are raising our total Omnipod revenue growth guidance to a range of 20% to 23% and total company revenue growth guidance to a range of 19% to 22%. We now assume a 100 basis point favorable impact from foreign currency to total revenue for the year. For U.S. Omnipod, we are raising our revenue guidance range to 18% to 21%, driven by strong Omnipod 5 adoption as we continue to grow our brand and reach in type 1 and type 2. We expect demand trends to continue benefiting from our differentiated Omnipod 5 platform relative to MDI. We remain confident in our expectation for year-over-year growth in new customer starts in 2025. Our U.S. growth guidance assumes similar trends in pricing, utilization, and retention for 2025 relative to 2024. For international Omnipod, we are raising our revenue guidance to 27% to 30%. On a reported basis, we now assume a 200 basis point favorable impact from foreign currency. We expect continued growth in the U.K., Germany, France, and The Netherlands as those markets benefit from new sensor integrations and customer upgrades from Omnipod Dash to Omnipod 5. We also expect our newer markets to ramp throughout the year. We anticipate international new customer starts to grow year-over-year in 2025. While volume is expected to be the primary driver of our international revenue growth, our guidance assumes a modest benefit from pricing as customers upgrade from Omnipod DASH to Omnipod 5. Additionally, we are assuming stable utilization trends. Based on first-quarter performance, we expect retention trends to improve slightly for 2025 relative to 2024. Turning to gross margin, we are raising our full-year gross margin guidance to approximately 71%. Our full-year gross margin guidance now assumes an impact of approximately 50 basis points from tariffs, mostly related to production from China. Given our strong manufacturing position and efficiencies from scale, we can absorb this impact and raise our gross margin guidance for the year. From a timing perspective, we now expect gross margin to be roughly stable from the first half to the second half, primarily influenced by the timing of tariff impacts. For the year, we also reaffirm our adjusted operating margin guidance of approximately 16.5%, reflecting 160 basis points of expansion over the prior year. Our guidance includes plans to continue investing in R&D and sales and marketing. We expect operating margins to be higher in the second half of the year compared to the first half as we grow revenue and achieve operating leverage. We have many catalysts for growth in 2025 and considerable opportunities to drive further margin expansion over the near and long term. Even as we make continued investments in our robust innovation pipeline and commercial efforts, we continue to expect to drive over 100 basis points of operating margin expansion annually. Looking at a few items below our operating income, we expect our 2025 net interest expense to be approximately $30 million higher than in 2024, largely due to our recent debt transactions and the renewal of our interest rate swaps. For the year, we still expect our non-GAAP tax rate to be in the range of 20% to 25%. We expect the 2025 ending balance of our diluted share count to be around $71 million, which is approximately 5% or 3.5 million shares lower than in the prior year. I would like to highlight that our Board of Directors recently authorized a program to repurchase up to $125 million of common stock through December 31, 2026, to offset dilution from stock-based compensation. From a cash perspective, we expect to continue to increase our free cash flow over the prior year. Annual capital expenditures are expected to be slightly higher versus the prior year as we continue to expand and optimize our manufacturing and supply chain operations and support global expansion. We remain focused on driving growth, margin expansion, and increasing profitability free cash flow as we continue strengthening our overall financial profile and supporting long-term value creation. I will now turn the call back to Ashley.

Thank you, Ana. As we wrap, I want to reiterate just how excited I am about the future of Insulet. You've heard today about our exceptional performance in the first quarter with 30% growth and gross margins above 70%, the highest in the diabetes technology space, along with our strong operating income and cash flow generation. This performance is a testament to our team, our technology, and our strategy. With well over $1 billion in cash on our balance sheet, we will continue investing to drive growth and expansion. We are the number one prescribed automated insulin delivery system in the United States and will continue building significant commercial and brand strength, particularly as we expand our focus on the type 2 market. Our global launches are gaining momentum, and the advantage we hold with Omnipod 5 is undeniable. We've also made and will continue to make significant investments in manufacturing and advanced automation, providing us with economies of scale and, most importantly, expanding access for more patients around the world. Our pay-as-you-go model has provided a significant first-mover advantage, and our relentless focus on innovation and supply chain strength will become increasingly critical differentiators in the long term. We have a strong track record of performance, and we are focused on continuing that momentum as we build out commercial capabilities, particularly in type 2 diabetes, and expand further into more global markets. Our updated 2025 guidance reflects our continued confidence in the path ahead. Finally, I'd like to take a moment to congratulate the team for your passion in improving patients' lives and your deep commitment to innovation and persistent hard work that have brought this company to where it is today. I am thrilled to embark on the next phase of our growth and impact together. Thank you. With that, operator, please open the call for questions.

Thank you. Speakers available today are Ashley McEvoy, Ana Chadwick, and Eric Benjamin. Our first question comes from Travis Steve from Bank of America.

Hi, everybody. Congratulations, Ashley, on the new role. I guess I'll start with a question there. Just kind of curious what excited you about the role of Insulet, what you've learned in the first couple of weeks in the role, and how you're thinking about the vision for the business? I know you've talked about taking this business from $4 billion to $6 billion in revenue and globalizing the business. So just kind of curious about your strategy behind that. And then also another part of the topic is kind of your view on margins in the business and how you think about any potential change in the longer-term margin targets for this company over time versus kind of the last CEO.

Yes. No, thank you, Travis. It's awesome to be here, and I'm humbled as well. I would first start with the space. I'm extremely passionate about diabetes; it's one of the most impactful and innovative-rich areas in health care. We know it has a vast population that can benefit from better med tech. I come with a huge amount of humility, and I honor my two predecessors, both Stacy and Jim. You can see the business has remarkable momentum. As I mentioned, I think that insulin plays at this unique intersection of consumer health and MedTech. We know that we have the best insulin delivery platform on the market, hands down, with a highly differentiated form factor and ease of use. So, early takeaways, I'd say, day nine, unbelievably talented team, very patient-centric. I've received over 100 different emails since day one from the diabetes community. I walked the Acton plant; we have an unbelievable advanced automation that we've invested in. The strategy is intact, and the company has a very clear pathway to achieve future value creation. In the near term, I think we're going to honor that strategy because it's working. You asked about margins, and you'll hear more on that. This is a very fast-growing asset; you heard us talk about increasing gross margin and operating margin this year, growing about 160 basis points versus last year. We expect continuous improvement in operating margins year over year. Thank you for the question, Travis.

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

Great. And I'll add my congratulations. Two for me. One, Ashley, maybe just to follow up. There were a lot of Street notes published over the past few weeks since you had the meeting with the sell-side. I felt that it inappropriately took away that you were going to focus on the top line at the expense of margin expansion. Just wanted you to have a minute to comment on that specifically, given that margin expansion and free cash flow have been such a critical part of the story the past few years? And then any comments you have on type 2 pump adoption in the U.S., how the launch is going, and how you see that playing out versus expectations? Thanks a lot.

No. Thank you, Robbie. Again, I would say that the business strategy as well as the financial strategy will really remain intact, emphasizing double-digit growth. You heard Ana mention continued improvement in gross margin at 71%, along with continued improvement in operating margin, which translates into very strong free cash flow. So on that, I'm going to invite Eric to talk a bit about our type 2, what we're learning.

Hey, Robbie, thanks for the question. We are really pleased with how the type 2 launch is going, and we're executing the three-part strategy that we've described. First, we're bringing the SECURE-T2D data to our current call point and driving activation of our HCP partners, helping them see how impactful Omnipod 5 can be to improve the lives of people who live with type 2 diabetes. That's going well. Second, Ana described our sales force expansion, and our U.S. team is almost done with hiring and about 90% of the way through training those expanded roles. This brings us to calling on about 40% of the population living with type 2 insulin-intensive diabetes instead of 30%. So a pretty significant expansion in the HCPs that we're reaching. Our team did a terrific job delivering the quarter while executing those changes. Finally, our direct-to-consumer advertising effectiveness is going well; we generate tremendous interest in Omnipod with our advertising. As folks reach out to us for more information, our team effectively helps them get on Omnipod even more efficiently. Those three aspects drove our new customer starts portion that came from type 2 diabetes over 30% in the quarter, up from about 25% where it was before we started the launch. The type 2 launch is going great.

Our next question comes from Jeff Johnson from Baird. Please go ahead. Your line is open.

Thank you. Good afternoon, everyone, and again, Ashley, congratulations on the new role. I just want to ask two modeling questions, I guess. When I look at the strength of the U.S. starts to the year, obviously, I see nice upside versus, I think, what most of us were expecting for sure. The guidance for mid-20% growth in the second quarter, you did mid-20% growth in the first quarter, and then the guidance for the full year at 18% to 21%. It would imply a second half operating in lower double digits, maybe even below the low teens. It sure feels like conservatism there, but is there anything else going on in that back half implied guidance we should be thinking about, differently than how the first half of the year is playing out?

Jeff, thanks. I'm going to turn to Ana, who will comment.

Sure. Jeff, first and foremost, we provided guidance with the full intent to deliver. The trends of the business are really strong. We're only in the first quarter, especially in the context of a new CEO transition. Our view is that the guidance we've set here is very strong, and we intend to deliver on our guidance.

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

Good afternoon, thanks for taking the question, and congratulations, Ashley, nice to reconnect with you. I was surprised by Ana when you talked about new starts being up quarter-over-quarter in the first quarter. I think you said in both the U.S. and internationally. Looking back at our model, I don't think we've seen new starts up sequentially in Q1 for many years. So it looks like new start growth was quite strong. Can you confirm that? And any color on what the drivers of that strong new start growth were?

Thank you for the warm welcome. I'll turn it to Ana.

Great. Larry, correct. Everything you stated there is correct. We're seeing significant strength in our new customer starts, quarter-over-quarter sequentially, and year-over-year. I'll pass it over to Eric to comment a little bit more.

Larry, Ana said it well. What we're seeing is just the differentiation of Omnipod 5, the pay-as-you-go model, wearable, disposable, affordable options, now integrated with multiple sensor options and the iOS phone control for type 2 indications—this is what customers want, and that's what we're seeing in the market. If you look back over the last four quarters, we've grown quarter-over-quarter despite launches from our tube competitors, and it hasn't affected our business. What you're witnessing is the category that we operate in, along with the differentiation of Omnipod 5. That's what drove a great quarter for us.

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

Good evening. Thank you for taking the question, and Ashley, congratulations on your new position. There’s so much to ask, but I really want to spend a minute on gross margins. We're outside the long-range plan; I know we're not going to have an Analyst Day until the fall. But what is your view of expanding gross and operating margins over the next couple of years? And how do you balance those goals with the investments that you need to make to build a much bigger organization?

Thanks, Joanne. I'll start with the gross margin. First of all, we're extremely pleased to have low 70s gross margins here, which are industry-leading. That's a testament to the team as they execute on manufacturing and supply chain efficiencies. We continue to see strength in those areas. Regarding operating margin, we're reaffirming here that 16.5%, which indicates a 160 basis point improvement year-over-year. Our approach to investing has not changed; we evaluate everything through rigorous models. We aim to maintain flexibility as we reach these new opportunities, which present a greenfield in the U.S. type 2 market, which is still relatively untapped, as well as expanding internationally. This is about positioning and continuing our strategy.

Our next question comes from Patrick Wood from Morgan Stanley. Please go ahead. Your line is open.

Amazing. Thank you so much for taking the question. I'd love to dig into the type 2 topic for a second. I'm curious about the feedback you're receiving from health care providers regarding patient flow and journey. Is this a multiple visit kind of endeavor that compels them to switch, or is it happening pretty quickly? Are there sticking points? How is the patient journey for conversion compared to how you expected it to be at the start of this journey?

Patrick, it's Eric. I can take that one. I think the headline is it's right on our expectations. There's a health care provider side and patient side to this. We're working to help health care providers appreciate the value of bringing automated insulin delivery to their type 2 patients who use insulin, and we're having good success with that potential. Once the health care provider is engaged, the journey is pretty similar to what we see with type 1. The experiences are heartwarming; for instance, last week in Pittsburgh, an office trained an 80-year-old woman who had some uncertainty about how she would manage the technology. She significantly reduced hypoglycemia and improved her health metrics, and was thrilled. Our team has the same approach in helping those folks through the journey of getting on products and ensuring a great experience.

Our next question comes from Marie Thibault from BTIG. Please go ahead. Your line is open.

Thanks for taking the question. Congrats on a great quarter. I wanted to revisit the trends we discussed earlier regarding early type 2 users. I think you said the U.S. guide assumes a similar trend in retention this year as last year. I'm wondering if you're observing early retention among type 2 users similar to type 1 users or if there's a risk associated with that assumption in the guidance.

Hey, Marie, Eric here. I can take that one. Our guide states that retention and utilization are stable on a portfolio basis. We're keeping a close eye on important metrics for type 2 as we ramp up that launch. Right now, they're behaving just as we expected. So, utilization levels are quite similar between type 2 and type 1. Although retention is somewhat lower in type 2 customers, the attrition is still strong, aligning with our expectations.

Our next question comes from Michael Polark from Wolfe Research. Please go ahead. Your line is open.

I have a question about international and what's ahead. The Middle East launches for Omnipod 5 seem interesting to me. When are those expected? And can you remind us of the size of the pod business in the Middle East today? How would you dimensionalize that opportunity for the international franchise, maybe compared to Germany and the U.K.? Just how excited are you about this one?

Hey, Mike, Eric here. To hit the Middle East launches first, we expect them to occur sometime between late 2025 and early 2026. We're finalizing the details with local partners and regulatory authorities. The majority of folks in our international markets have access to Omnipod 5 now. The Middle East launches are smaller compared to our previous launches in the U.K. and Germany. However, market potential for type 1 diabetes in international territories is vast, with about 3.5 million people living with type 1 in those markets and a current penetration of only about 20% to 25%. There's significant growth potential, and we're optimistic about how we can improve the lives of patients with the introduction of our product.

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

I would love to stay on this market acceleration topic for a second. Q1 has been quite good for pretty much everyone that reported so far, and I'm curious about what is driving that. In thinking about this industry, type 1 was kind of stuck at 25% penetration forever; it's now up to about 45% in terms of pump utilization over the years. Do you foresee getting similar growth in the type 2 market, boosting from 5% to 25% over the next seven to eight years, and what might be the obstacles to achieving that?

Hey, Matt, thanks for the question. What we've observed is that current type 2 penetration is around 5%. As stated earlier, we believe it's achievable to double or triple that number. We're still quite early in the type 2 launch; thus, it may take a few quarters to gauge how fast market penetration will occur. We also recognize that there's a technology renaissance in type 1 that has aided penetration, which applies to type 2 as well, as we've seen in early experiences with Omnipod 5. HCPs are pleased with the life-changing impact of our product for people living with type 2 diabetes, and we believe we will achieve our growth objectives. However, it is still too early to forecast the precise pace.

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

Thank you. Congratulations to Ashley, and congratulations on the quarter. You talked about continued progress in type 2, highlighting the expanded commercial sales force. Can you delve into the direct-to-consumer efforts? How deep are you into that work? Can you share any returns from the programs you have implemented?

Great, I'll start with that one. We're super excited about our direct-to-consumer initiatives. As we've mentioned before, the same advertising we put out is now more efficient. It's seen by an interested audience. We're experiencing increased leads as well as our ability to convert those leads effectively. We're seeing higher conversion rates—we're very excited. We continue to invest in our direct-to-consumer spending, and we have it built into our guidance and plans.

Our next question comes from Bill Plovanic from Canaccord Genuity. Please go ahead. Your line is open.

Hi. Great. Thank you for taking the question. This is Zachary for Bill today. Have you realized any benefits from Abbott's partnership with Epic RO? Can you provide any details about what that partnership looks like? Is there a CGM being listed in the drop-down menu? What are you seeing there?

Hi, Zachary. Thanks for the question. It's Eric. I'm not familiar with the specifics of how their partnership with Epic shows up in offices.

Our next question comes from Issie Kirby from Redburn Atlantic. Please go ahead. Your line is open.

Hi. Good evening. Thank you for taking my question. I wanted to ask about the Malaysia ramp and how that impacted gross margins this quarter. Furthermore, on manufacturing and its capacity with respect to tariffs, I would love to get updated thoughts on your volumes coming out of China, and any perspectives on potentially repositioning those to Malaysia or Acton over the next few years? Thank you.

Thanks, Issie. I'll take that. Malaysia is on track; we've discussed that it will be accretive to margins in the first year of operations, which we anticipate will happen as we move into the third quarter of this year. From a tariff perspective, I mentioned that we are under the exemption for certain components. We expect a small impact, around 50 basis points, for 2025, and we initially guided for a gross margin of 70.5%, which we have now raised to 71%. This includes absorbing the 50 basis points of tariff impact we currently estimate. Operations are going very well, and the team is performing effectively, and we're excited to maintain industry-leading gross margins.

This will conclude our Q&A section. I would now like to turn the conference back to Ashley McEvoy.

Thank you so much for the warm welcome, everyone, and for spending time with us tonight. Clearly, we had a very strong quarter, and I just want to wrap that up. I think you've heard that the strategy is intact, and we are going to continue driving robust growth while achieving profitability globally. This company is focused on having patients at the front and center. I want to acknowledge the Insulet team, and thank you for joining us tonight.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day, and you may all disconnect.