Dive Brief:
- Insulin delivery device maker Insulet added more new patients during the second quarter than its management team or Wall Street analysts projected, contributing to a roughly 28% rise in revenues to about $226 million.
- Even though the number of new device users was cut in half during the quarter, Insulet's management team had predicted a drop as much as 75%, leading it on Thursday to raise revenue growth guidance for the year from 15% to between 17% and 19%. Additionally, CFO Wayde McMillan reiterated the company's belief it will hit $1 billion in annual revenue next year.
- Insulet's results round out a quarter of continued momentum in the diabetes tech sector even as other parts of the medtech industry are heavily affected by the impacts of COVID-19. "In a world where many companies are pulling or lowering guidance, solid growth and a raise stands out," analysts at UBS wrote in a note. Growing adoption of insulin pump therapy and continuous glucose monitoring catalyze one another in the Type 1 diabetes population and, increasingly, among people with Type 2.
Dive Insight:
Momentum for technology targeting widespread chronic conditions, including Type 1 and Type 2 diabetes, is circumventing some of the pandemic effects hurting other areas of medtech, reliant on care involving a deferrable intervention rather than daily maintenance.
Insulet's growth came despite the fact that its number of new device users, a metric expected to be under pressure as patient-doctor interactions were complicated by the pandemic, was cut in half. But Insulet execs had predicted new patient starts could be depressed as much as 75%.
While diabetes device makers don't have to break out the number of new users each quarter, insulin delivery tech manufacturers Insulet and Tandem, along with continuous glucose monitor makers Abbott and Dexcom, all reported double-digit revenue gains.
And newly acquired diabetes and chronic condition management platform Livongo, which integrates with Dexcom's G6 CGM, reported that its number of diabetes program members exceeded 410,000 by the end of June, a year-over-year increase of 113%. Meanwhile, implantable CGM contender Senseonics, which does not report second quarter results until Monday, continues to grow coverage for its smaller-scale device.
Diabetes tech continued to grow in the face of the pandemic
YOY revenue growth | vs. Wall Street's expectations | 2020 revenue guidance | Stock movement since start of Q2 | |
---|---|---|---|---|
Insulet | +27.8% | Beat on revenue and earnings | Raised: from +15% to +17-19% | +44.17% |
Tandem | +17% | Beat on revenue, miss on earnings | Reinstated: +14-18% | +78% |
Dexcom | +34.3% | Beat on revenue and earnings | Reinstated: +25% | +73% |
Abbott Diabetes | +25.4%, or +36.8% for FreeStyle Libre product | (not broken out for diabetes business) | (not broken out for diabetes business) | +33% |
Livongo | +125% | Beat on revenue and earnings | Slated to be absorbed by Teladoc by end of Q4'20 | +381% |
Insulet has rebranded its in-development Omnipod Horizon system as Omnipod 5. The company resumed the related 240-patient pivotal study for Omnipod 5 late in the second quarter after halting it in March upon discovering a software glitch that could result in incorrect insulin dosing. Insulet execs Thursday said they expect the trial to wrap up by the end of the fourth quarter, with results shared at the likely virtual Advanced Technologies & Treatments for Diabetes (ATTD) conference in February. That puts launch of the system still on track for sometime in the first half of next year.
Insulet will join an automated insulin delivery systems (AIDs) market in which only Medtronic and Tandem have devices OK'd for sale. Insulet execs said they're still weighing how to price their forthcoming device.
"We know that we’re third to market, and as such, we didn’t design Omnipod 5 just to be an incremental improvement automated insulin delivery," CEO Shacey Petrovic told investors, noting that the company is currently adding significant capacity in anticipation of the device's launch next year.
Petrovic highlighted the company's continued work integrating Insulet products with next-generation technologies from partners Dexcom, Abbott and Tidepool, all of which competitor Tandem shares as partners.
Tandem has a head start on Insulet in the interoperable AIDs market, having obtained FDA's OK last year for its Control-IQ algorithm, which allows a user to integrate a Dexcom CGM with a Tandem pump, and recently gained UnitedHealthcare coverage for its device. That technology helped Tandem grow sales 17% to about $109 million during the quarter.
Analysts at SVB Leerink "continue to believe that diabetes devices are at an adoption inflection point," but take a balanced view on Insulet's stock.
"Given the uncertainty around what impact COVID and/or any protracted recession could have on the installed base and what looks to be an increasingly competitive insulin pump market over the next 12 months with likely 4 integrated systems on the market, we're staying on the sidelines for now."