Q4 2025 Earnings Call Transcript

Good morning, and welcome to the Insulet Corporation Fourth Quarter and Full Year 2025 Earnings Call. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Clare Trachtman, Vice President, Investor Relations.

Good morning, and welcome to our Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Ashley McEvoy, President and Chief Executive Officer; Flavia Pease, Chief Financial Officer; and Eric Benjamin, Chief Operating Officer. On the call this morning, we will be discussing Insulet's fourth quarter and full year results, along with our financial outlook for the first quarter and full year 2026. With that, let me start our prepared remarks by reminding everyone that certain statements, including comments regarding our financial outlook for the first quarter and full year 2026 the anticipated impact of our strategic actions, the potential impact of various regulatory and operational matters and the macroeconomic environment on our results of operations contain forward-looking statements that involve risks and uncertainties.

And of course, our actual results could differ materially from our current expectations. Please refer to today's press release and our SEC filings for more detail concerning factors that could cause actual results to differ materially. In addition, on today's call, non-GAAP financial measures will be used to help investors understand Insulet's ongoing business performance, including adjusted operating income, adjusted EPS, adjusted EBITDA, adjusted tax rate and constant currency revenue, which is revenue growth, excluding the effect of foreign exchange. A reconciliation of certain non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in the accompanying investor presentation and available in our earnings release issued this morning, which are both available on our website.

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. During the Q&A session this morning, Ashley, Flavia, Eric and myself will be available to address any questions. Now I'd like to turn the call over to Ashley. Ashley?

Thank you, and good morning, everyone. I'm pleased to share that we closed 2025 with another strong quarter, recording our 10th consecutive year of 20% or greater constant currency revenue growth. This consistent track record reflects the strength of our durable recurring revenue, profitable business model and the breadth and depth of our competitive moats. Our strong clinical evidence and real-world outcomes continue to earn prescriber and patient confidence and the consistency of our execution, along with the deep commitment of the Insulet team to finding a better way for people living with diabetes has enabled us to deliver enhanced value to all of our stakeholders.

I want to start by thanking our Insulet employees around the world. 2025 was a year of significant progress at Insulet and the entire organization delivered on our goals without missing a beat. Your dedication to our mission fills me with confidence today and well into our future. Our results in the fourth quarter are a testament to the reliability, consistency and broad appeal of Omnipod, coupled with the strength of our strategy and execution. Total company revenues were $784 million, advancing 29% constant currency.

U.S. revenues of $568 million increased 28% and international revenues of $214 million grew 42% constant currency. This strong finish to the year enabled us to surpass $2.7 billion in revenue for the full year, more than doubling our revenue base over the last 3 years and delivering approximately 30% year-over-year constant currency growth. Our annual performance of $1.9 billion or 27% growth in the U.S. and $754 million or 39% constant currency growth in international markets highlights the progress and the impact we're making as we continue to unlock more of our $30 billion-plus total addressable market.

We achieved record new customer starts across both the U.S. and international in the fourth quarter and for the full year, with the vast majority coming from people transitioning from multiple daily injections. This reflects growing provider confidence, which, as I just mentioned, is driven by strong clinical evidence and consistent real-world outcomes. Importantly, it also reinforces that Insulet is not only the market leader in AID, but also the clear driver of overall market expansion, and we intend to maintain this leadership position. Turning to our key markets and starting with our largest, U.S. type 1, where we continue to focus on extending our leadership.

The U.S. type 1 market is a more than $9 billion opportunity with AID penetration at just 40%, which is well behind CGM penetration of 70%. In 2025, we delivered year-over-year growth in type 1 new customer starts in both the fourth quarter and the full year, driven by strong patient and prescriber preference for Omnipod. In fact, both type 1 and type 2 users in the U.S. named Omnipod 5 their favorite pump in 2025. Omnipod's strong clinical evidence, broad access, affordability and ease of use are enabling us to expand well beyond traditional endocrinology channels. Our U.S. prescriber base now includes more than 30,000 health care professionals, up approximately 28% year-over-year.

The strength and reach of our commercial teams position this segment to remain a meaningful and consistent contributor to our global customer growth. Momentum in the U.S. type 2 continues to build as well. In the fourth quarter, type 2 new customer starts grew significantly, both sequentially and year-over-year, rapidly expanding our type 2 user base. This acceleration reflects strong clinical and real-world outcomes, continued investment in demand generation and the recent ADA guideline update recommending AID for people with type 2 who require insulin.

Our type 2 prescriber base grew 62% in 2025 to now more than 6,500 clinicians. Most people with type 2 diabetes are being managed in primary care settings. Therefore, expanding beyond endocrinology represents a meaningful and sustainable growth opportunity. In a type 2 market of more than $12 billion, where AID penetration remains below 5%, which is far behind roughly 55% of CGM adoption, stronger education, improved outcomes and increasing access are already accelerating adoption.

Importantly, we are unlocking this opportunity in a strategic and capital-efficient way. Our U.S. sales force, which is the largest in the industry, reaches high-prescribing offices that treat both type 1 and type 2 diabetes, giving us confidence in our ability to unlock the next 5% to 10% of type 2 penetration efficiently. Our growing type 2 customer base continues to surface powerful stories about the impact Omnipod 5 can have including the experience of Verquise. He knew something was wrong when he began experiencing pain in his feet and arms and an urgent care visit led him to an unexpected diagnosis of type 2 diabetes.

After reviewing insulin delivery options with this doctor, Verquise chose Omnipod because he shared, I really love the mission and the promise that was exuded from Omnipod to add normalcy to my diabetes and to show that my life can still be balanced and that this brand, this family will always be there and will forever evolve as medical technology does. Stories like Verquise, combined with the growing excitement among both health care professionals and people with type 2 diabetes, continue to strengthen our conviction in this significant type 2 market opportunity. Looking ahead, we expect to expand penetration even further with the launch of our fully closed-loop offering planned in 2028, which will enable us to reach and serve the broader primary care population.

Additionally, pharmacy access remains a critical differentiator in the U.S., making it easier for people with diabetes to start and stay on therapy. Over the past decade, we've built strong relationships with payers and PBMs across the U.S., backed by clinical and economic evidence that continues to resonate. We have the broadest access in the market available in approximately 48,000 U.S. pharmacies and covered for more than 90% of insured lives or about 300 million of the 317 million insured people. Our offering is affordable with most users paying about $1 a day through our pay-as-you-go model and preferred formulary position.

And we continue to invest in programs designed to further reduce the remaining barriers to access, including efforts to simplify the prior authorization process for providers, particularly among primary care prescribers who treat large numbers of people with type 2 diabetes. Omnipod also continued to drive standout international performance, fueled by strong year-over-year and sequential growth in new customer starts, along with continued positive price/mix realization driven by conversion from Omnipod DASH to Omnipod 5. We continue to see solid performance across our established European markets, supported by new sensor integrations such as our launch with Dexcom G7 in Germany.

Our Omnipod 5 launches in Canada and Australia also delivered robust growth. In Canada, we secured reimbursement, recognizing Omnipod 5's value in half of all provinces, helping drive more than 60% growth in new customer starts. And in Australia, new customer starts more than tripled following the launch of Omnipod 5. Our global expansion will continue in 2026 with Omnipod 5 and Omnipod Discover recently launching in the Middle East. In addition, Spain, our newest market, is expected to launch Omnipod 5 later this year.

Volume remains the primary driver of our international growth and the ongoing transition from Omnipod DASH to Omnipod 5 will continue to support positive price/mix realization. Pricing contributed high single-digit growth in both the fourth quarter and the full year 2025. Our international growth runway remains substantial. The type 1 market alone exceeds $10 billion, yet only 1 in 4 people with diabetes outside the U.S. is using AID therapy, even as CGM penetration reaches around 65%. As adoption of AID accelerates worldwide, our proven commercial playbook, expanding product portfolio and growing geographic footprint position us extremely well to continue capturing share, delivering value and driving sustained international growth.

To bring this all together, we have a large underpenetrated TAM across U.S. type 1, U.S. type 2 and international markets with significant runway to unlock additional growth in one of the fastest-growing categories in MedTech. And our proven track record reinforced by our performance this year underscores our ability to continue to deliver top-tier growth and value creation for shareholders. Notably, this top-tier growth has allowed us to deliver meaningful margin expansion even as we continue to invest thoughtfully to extend our competitive advantages in innovation, clinical outcomes, access, brand and manufacturing.

For the year, we achieved record gross and operating margins, delivering 180 basis points of gross margin expansion and 270 basis points of operating margin expansion. We remain committed to investing with discipline, ensuring we sustain the strong growth we are delivering today while also driving continued improvements in profitability. The investments funded by our durable recurring revenue, profitable business model and strong financial position fueled significant progress across every aspect of our strategy in 2025. We expanded our global scale this year with launches in 9 new countries, launched our G7 CGM integration, increased full phone control adoption to more than 60% of U.S. users and continued building the foundation for our next-generation systems.

We also advanced our clinical programs in meaningful ways. We published results from SECURE-T2D and RADIANT, completed the STRIVE study for Omnipod 6 and moved into the next phase of our EVOLUTION study supporting our fully closed-loop system for adults with type 2 diabetes. Collectively, these programs further strengthen the scientific foundation behind Omnipod, advancing our algorithms for optimal performance, fortifying the case for broader AID adoption and enabling continued global expansion. We invested in market development in new, more visible and impactful ways.

Our expanded sales force is now more than 25% larger than our nearest competitor. Our DTC campaigns are generating record lead volume and activating new prescribers. And our enhanced insights and analytics capability are helping us optimize our cost to acquire and cost to serve, driving continued expansion in customer lifetime value. These advances and efforts have solidified Omnipod's status as the most requested, most preferred and most prescribed AID system.

Among new customers, 70% of those who walk into a prescriber's office request a brand ask for Omnipod 5. And among existing users, Omnipod 5 maintains the highest Net Promoter Score in the category. Now I want to take a few minutes to walk through how we will continue advancing the long-term strategy we outlined at our 2025 Investor Day to extend our leadership and strengthen patient and physician choice for Omnipod. Innovation remains central to our strategic approach. And in 2026, we will deliver a steady cadence of highly requested enhancements to reinforce our leadership in automated insulin delivery.

This includes algorithm updates that enable a 100 set point target for tighter glycemic control, increased time in automated mode and improve responsiveness to enhance both the user experience and clinical outcomes. We will also expand our CGM integrations to include FreeStyle Libre 3 Plus, making Omnipod 5 compatible with every major sensor, and we will roll out Omnipod Discover globally. Omnipod Discover is a new data platform that delivers clear streamlined insights to support efficient health care professional review of Omnipod 5 data and enable more confident prescribing. Discover provides users with actionable guidance and reassurance, strengthening engagement and adherence.

It also simplifies onboarding, reducing efforts for new users and accelerating the start-up experience. Collectively, these enhancements reduce day-to-day effort with fewer device interactions, broader CGM choice and more actionable insights that help patients and clinicians with confidence. In 2026, we will continue to purposely increase R&D investment to advance our next-generation platforms, including Omnipod 6 as well as our fully closed-loop system for type 2 diabetes and future innovations. This also includes continued progress across our clinical programs with ongoing work in STRIVE and EVOLUTION.

Let me take a moment to share more on our next-generation platform, starting with Omnipod 6. This system is designed to address the critical needs of users by meaningfully reducing day-to-day burden and increasing flexibility through improved connectivity, expanded flexibility in on-body placement, real-time software updates and more personalized automation. It will feature a smarter algorithm to further personalize insulin delivery with pivotal data to be presented at ADA in June. Importantly, we are designing a single updatable Pod platforms that will be compatible across all CGM systems. These capabilities not only improve outcomes and the wear experience, but also accelerate our innovation cycle as we prepare for launch in 2027. Turning next to our fully closed-loop system for people with type 2 diabetes, which is designed to make AID accessible to virtually everyone.

As the market leader in AID, it's important that we define what fully closed loop truly means for patients and providers. It is a system that delivers therapy effortlessly, adapting automatically without any user intervention. No dosing, no mealtime actions and no required adjustments while the Pod is worn. For us, fully closed loop also means redefining the provider experience, requiring no clinician-defined settings to start and simple enough for a patient to initiate on their own.

Reflecting this definition, we believe our fully closed-loop system will help address a significant unmet need for the 5.5 million people with type 2 diabetes who are on insulin, only about 25% of whom achieve recommended glucose targets today. We expect to initiate our pivotal EVOLUTION study this year, supporting a regulatory filing in 2027 and a commercial launch in 2028. Finally, operational excellence remains a core focus as we work to expand margins in 2026, while continuing to fund our R&D and commercial investments. In 2025, we delivered significant margin expansion driven by scale and ongoing manufacturing productivity with our Acton and Malaysia facilities ramping ahead of plan.

In 2026, we expect additional leverage as we invest in more capacity and further automation. And with the help of AI, we are increasingly tapping into our unique cloud-based data ecosystem to enhance customer service efficiency and satisfaction, reducing our cost to serve while strengthening retention. Taken together, these priorities position us extremely well to execute on our long-term strategy and continue strengthening and driving choice for Omnipod among patients and providers worldwide. All of these investments, strategies and consistent execution come together in the financial growth algorithm we introduced at our 2025 Investor Day.

Our 2026 guidance aligns fully with this growth outlook, and Flavia will walk through the details in a moment. This outlook is supported by our continued investment in innovation, science, market development, demand generation and manufacturing, balanced with the discipline that has defined our execution over the past several years. We remain committed to delivering market-leading financial performance while investing in the next wave of transformative innovation. We entered 2026 with strong momentum and clear priorities that position us well and give us confidence in achieving our financial goals.

To close, 2025 was a year of tremendous growth for Insulet, financial, strategic and organizational. We expect to build upon this in 2026 as we lighten the burden of living with diabetes for hundreds of thousands of people and in doing so, drive penetration, increase our scale and create value for our shareholders. We operate from a position of strength with durable competitive advantages, a large and underpenetrated market and a purpose-driven, highly motivated team committed to finding a better way. We look forward to extending our leadership in the year ahead and beyond.

Thank you for your continued support and interest in Insulet. I'll now turn the call over to Flavia to walk through the financials and guidance in more detail.

Thank you, Ashley, and good morning, everyone. The Insulet team had another strong year in 2025 and closed with an impressive fourth quarter, delivering over $780 million in total revenue, an increase of 31.2% at reported rates and 29% at constant currency rates. During the quarter, total Omnipod grew 31.3% on a constant currency basis. We generated total revenue of over $2.7 billion in 2025, an increase of 30.7% at reported rates and 29.5% at constant currency rates.

For the year, total Omnipod grew 30.3% on a constant currency basis, showcasing sustained global demand for Omnipod 5. Across both fourth quarter and full year, we achieved record new customer starts in the U.S., international markets and company-wide, with growth accelerating on both a year-over-year and sequential basis. In the U.S., during the fourth quarter, over 85% of new customer starts came from MDI and type 2 represented over 40% of all starts, underscoring the significant expansion of this customer segment. Our estimated global utilization and annualized retention rate remained roughly stable for the fourth quarter and the full year.

Now turning to our performance in greater detail. U.S. Omnipod revenue grew 28% in the fourth quarter and 27.2% for the year, above the high end of our guidance range, driven by continued demand for Omnipod 5 across type 1 and type 2 customers. As we commented last quarter, U.S. revenue growth during 2025 was impacted by rebate timing and prior year inventory stocking dynamics.

Normalizing for these impacts, U.S. growth in the fourth quarter was approximately 30 basis points higher, representing an acceleration from normalized third quarter growth levels. Our international Omnipod business grew 50.7% on a reported basis and 41.7% on a constant currency basis for the fourth quarter. For the full year, international Omnipod revenue grew 44.1% on a reported basis and 39.3% on a constant currency basis. Volume was the primary driver of international Omnipod growth, while positive price/mix realization continued to contribute as customers shift from Omnipod DASH to Omnipod 5. As in prior quarters, we witnessed strong growth in the U.K., Germany and France, in addition to the other countries where we have launched Omnipod 5. In 2025, our 9 expansion markets collectively delivered growth in line with the U.K. and Germany combined, reflecting the broad market appeal of Omnipod 5 and benefits to patients globally.

Continuing down the P&L, our fourth quarter gross margin was 72.5%, reflecting a 40 basis point expansion year-over-year. Our full year 2025 gross margin of 71.6% reflected a 180 basis point expansion year-over-year. This improvement was fueled by robust top line growth, continued manufacturing productivity gains at our Acton and Malaysia facilities, supported by positive pricing and increased volumes. As mentioned last quarter, Malaysia became margin accretive just 1 year after coming online.

Turning to OpEx. We continue to make purposeful investments to both maintain and extend our leadership. We are fortunate to be in a position where we can meaningfully fund our innovation pipeline and ensure we are first to deliver truly transformational technology to the market. In line with this commitment, we increased R&D spending by 50% in the fourth quarter and 37% for the full year as we advanced our innovation road map and clinical development programs, including our STRIVE and EVOLUTION studies.

At the same time, we remain disciplined and targeted in our SG&A investments. We continue to prioritize market development initiatives to unlock AID penetration and demand generation efforts, including expanding our commercial and customer experience teams to drive share and increase retention of our leading AID technology across both type 1 and type 2 diabetes. For the year, we successfully optimized both our cost to acquire and our cost to serve, 2 key metrics we remain focused on improving as we enhance customer lifetime value. Fourth quarter adjusted operating margin of 18.7% reflected robust revenue growth, strong gross margins and continued investment to advance innovation and key commercial strategies.

Our full year adjusted operating margin was 17.6%, ahead of our most recent guidance and representing 270 basis points of expansion versus the prior year. As Ashley mentioned, we are well positioned to continue investing robustly for future growth while delivering meaningful margin expansion for years to come. Fourth quarter net interest expense was $9.2 million, an increase of $11 million relative to prior year, primarily driven by the debt refinancing. Full year net interest expense was $24.7 million, an increase of $22 million compared to the prior year, again, primarily driven by impact of our senior unsecured notes issued in March.

Our fourth quarter non-GAAP adjusted tax rate was 22%, and our full year non-GAAP adjusted tax rate was 22.3%. Fourth quarter adjusted EPS was $1.55, increasing 35% from $1.15 in the prior year comparable period, while full year 2025 adjusted EPS was $4.97, up 53% from $3.24 in the prior year. During the year, we repurchased approximately 184,000 shares for $59.6 million. Turning to cash and liquidity.

We ended the quarter with $716 million in cash and the full $500 million available under our credit facility. We delivered more than $375 million in free cash flow for 2025, a 24% increase over last year. 2025 free cash flow included approximately a $70 million tax benefit related to the One Big Beautiful Bill. As a reminder, free cash flow includes capital expenditures, which grew meaningfully in the fourth quarter to $135 million, reflecting our continued investment in manufacturing capacity. This included further expansion of our Malaysia operations with additional lines coming online as well as the start of development of our new facility in Costa Rica, which is expected to be operational in 2029. These investments strengthen our global footprint, advanced our automation initiatives and position us to support industry-leading growth while continuing to expand margins over time.

Now turning to our outlook for the first quarter and full year 2026. For the first quarter, we expect Omnipod revenue to grow 28% to 30% with total company growth of 25% to 27%. On a reported basis, foreign currency is expected to provide a favorable impact of about 200 basis points to both measures. In the U.S., we anticipate Omnipod growth of 24% to 26%. And in our international business, we expect Omnipod growth of 37% to 39%.

On a reported basis, foreign currency is expected to contribute a favorable impact of roughly 1,100 basis points to international growth. Turning to our full year 2026 outlook. We expect our total Omnipod revenue to grow 21% to 23% and our total company revenue to grow 20% to 22%. We expect a favorable impact of 100 basis points from foreign currency for the year.

Our guidance reflects continued top-tier market-leading growth, but I know you will all ask me why is growth decelerating? Just a couple of quick notes on this. First, this year, we will be anniversarying the first full year of the U.S. launch of Omnipod for type 2, which was a significant contributor to last year's performance. In addition, we're beginning to annualize several of our international launches, which continue to ramp well, but create more challenging year-over-year comparisons.

These year-over-year comp dynamics are reflected in our 2026 guidance. For U.S. Omnipod, we expect our revenue to grow 20% to 22%, driven by increased penetration from MDI users and competitive gains. We expect year-over-year growth in U.S. new customer starts for the year, and we assume similar trends in pricing, utilization and retention as we saw in 2025. For international Omnipod, we expect 2026 revenue to grow 24% to 26%.

On a reported basis, we expect a favorable impact of approximately 300 basis points from foreign currency. We expect year-over-year growth in international new customer starts for the year as we penetrate further in current markets and expand Omnipod 5 into new markets. Omnipod 5 is now available in 19 countries, including 5 recent additions in the Middle East, and we will continue to broaden our reach and plan to enter Spain by late 2026. While volume remains the primary driver of our international revenue growth, our guidance also reflects a benefit from positive price/mix realization as customers continue to transition from Omnipod DASH to Omnipod 5. Overall, our international growth guidance assumes stable utilization and slightly improving retention from 2026 relative to 2025. Turning to 2026 operating margin.

In line with the annual guidance we provided at our recent Investor Day, we expect to drive approximately 100 basis points of operating margin expansion for the full year, reflecting strong top line growth, modest gross margin expansion, a significant step-up in R&D investments to fuel our innovation pipeline and leverage SG&A spend. Looking at a few items below our operating income. We expect 2026 net interest expense to total approximately $40 million, primarily due to lower interest income, and we expect 2026 non-GAAP tax rate to be in the range of 22% to 23%. Our team is actively focused on assessing potential opportunities to optimize our interest expense and tax rate over time.

Turning to shares outstanding and EPS. I'm pleased to share that the Board has approved an additional $350 million share repurchase authorization. We expect to deploy approximately $300 million of this authorization into the first quarter of 2026. Our strong balance sheet gives us the flexibility to continue allocating capital in line with our long-standing principles, investing for growth while delivering long-term value for our shareholders. Based on our current share count and repurchase plans, we expect the 2026 ending balance of our diluted share count to be around 70 million shares.

Based on these factors, we expect 2026 adjusted EPS to increase by more than 25%. We expect free cash flow to be approximately flat from 2025 levels, supported by robust growth and continued margin expansion, partially offset by a ramp-up in capital expenditures to support our continued global manufacturing expansion plans. As I just mentioned, 2025 free cash flow included approximately $70 million related to a tax benefit from the One Big Beautiful Bill. Our team remains steadfast in its commitment to driving top-tier growth, expanding margins and increasing profitability and free cash flow.

These efforts are central to our long-term value creation strategy and enable us to reach and serve more people with diabetes around the world. With that, operator, please open the line for questions.

[Operator Instructions] Your first question today comes from the line of Jeff Johnson from Baird.

Congratulations on a strong close to the year. Ashley, I just want to start from a high level maybe with the first question here. You're a couple of months away from your 1-year anniversary leading Insulet. Stock has had a great run in the first 6 months of your tenure.

It's faced maybe some challenges here in the last 5 or 6 months. What do you think is the most underappreciated part of the Insulin story at this point, especially from an investor perspective?

Yes. Jeff, thanks for the question, and it's great to see Insulet continue to execute and live into our commitments that we shared in November at our Investor Day. I would highlight 4 key areas. Number one is our tech lead, which we'll continue to innovate off of.

I'll come back to that. I would say number two is our growing commercial prowess. I'll come back to that. Three is our manufacturing at scale; and four is our financial strength.

So I'll start with just our tech lead. As we shared, we've invested over $3 billion to get here. Omnipod 5, we're just 3.5 years into the launch, into the U.S., 2.5 years in places like the U.K. and Germany, and we continue to post record NCS. This knowledge, this experience and this tech lead really continue to prove the leadership that's resulted in, number one, most prescribed and number one most requested.

And importantly, in my opening remarks, I really shared how we've built this meaningful pipeline that really addresses the biggest unmet needs in the market. And you heard us touch around really 2 algorithm improvements starting this actually weekend, we launched a limited market release with Omnipod 5 with a lower set point, advanced automated mode. It connects with Libre 3. We're going to be launching our new data platform. So that will be going out into full market release in a couple of months.

We will be launching our third-generation algorithm with Omnipod 6. As we mentioned in our opening remarks, we're going to be posting the data and the algorithm at the ADA. This is a meaningful advancement in personal automation as well as over-the-air connectivity as well as on the bod placement with a lot of variability, which is important for patients as well as the 1 pod. And you're going to hear us talk about -- there's been a lot of noise, if you will, in the industry, which is really good things for patients around this fully closed loop. We believe that we are in a class by ourselves of how we're going to define what fully closed loop really means.

I'll come back to that in inquiry. But it's a very strong pipeline. And then our commercial prowess, I think, is really underappreciated. We have the largest sales force in the industry.

We are going to evolve that sales force for messaging from selling on simplicity and ease of use and our highly differentiated technology to our strength of clinical performance. I'll come back to that. And then as Flavia was mentioning in her opening remarks, 30,000 prescribers with Omnipod, which is up 28%. Very strong brand loyalty, and we continue to have unparalleled access and affordability.

We manufacture at scale. It's one thing to get regulatory approval, it's different than to manufacture. We produce tens of millions of Pods with high-quality medical-grade quality at consumer electronic scale. And when we say something, we execute on what we're going to say.

I'm really pleased the team is building out Malaysia. We're already margin accretive in Malaysia. In Acton, we've improved productivity, and we've already started to break ground on Costa Rica. And last is just the financial wherewithal and, you know, not only our recurring revenue model, 70% gross margin, expanding operating margin, EPS above revenue and cash flow positive.

So those are perhaps underappreciated tenets of the Insulet company. Thanks for the question, Jeff.

Your next question comes from the line of Robbie Marcus from JPMorgan.

Congrats on a good quarter. I wanted to ask -- I guess it's limited to 1. I wanted to ask on new patient start trends, U.S. and outside the U.S. And we've seen some of your competitors stumble a bit on new patient adds recently. How are you thinking -- you mentioned record new patient starts, I believe that's a U.S. and outside the U.S., but you could clarify that if I'm wrong.

How are you thinking about finding sources of sustainability in the new patient growth? Type 2 is clearly a home run for you in the U.S. How do you keep that growing and getting larger and larger and continuing to win there? And then same question outside the U.S., you've been moving into new geographies.

How do you sustain your #1 share there and continue to grow that over time?

Thank you, Robbie. Yes, we did -- as I mentioned before, I think in Investor Day, we enjoy very balanced growth from the U.S. and OUS. We did enjoy record new customer starts in the U.S. as well as OUS. And our role as a category leader, as we shared, we've generated about 65% of the market growth has come from Insulet.

And that really is the primary source of our volume are coming from people not in the category, and those are people on multiple daily injections. And so we engineer our innovations to address -- to bring new customers into the market. We do enjoy about 10% of ours comes from switching, and we are switching from competitive AID, but our primary source is coming from MDI. And that we can go into type 1, where we continue to improve new customer starts and post new records in type 1, both in the U.S. as well as OUS.

In the U.S., that's backed by strong ADA guidelines. We mentioned that 40% of people on AID therapy, there's still a lot of room when CGM has 70% penetration. There's a 30-point spread. So backed by science, making the education to really educate on our very strong clinical performance as well as just kind of the unparalleled access and affordability in type 1. Type 2, Robbie, you mentioned we're at the nascent stages, 5% penetration.

We have a very strong value proposition. We have very strong science. You're going to hear us talk more about kind of our strategic pivot, taking advantage of the largest channel of the #1 sales force in the U.S. of migrating from really sharing our differentiated technology into proven clinical outcomes. It's something, quite frankly, we own.

There's a bit of a misperception in the marketplace that we have to correct and stand and set the record straight, which is in addition to our, if you will, preferred form factor and preferred user experience, we have very robust clinical performance on A1c reduction and improved time and range, not just in our clinical trials, but importantly, in 2 independent studies just recently that compared AID systems, Omnipod's A1c was unsurpassed and our time and range was similar. So we're going to take that message and that science to the largest channel of our P&L, which is our field force. Thanks for the question, Robbie.

Your next question comes from the line of David Roman from Goldman Sachs.

Maybe just sort of follow up on Robbie's question here. Can you help us reconcile script trends to what you're seeing in reported revenue? I think this is a dynamic that caused quite a lot of noise intra-quarter. So can you maybe size up how new patient start trends and volume growth compares to revenue?

And if script data is not the right barometer, what should investors be using to track performance? And I have one financial follow-up.

Sure. Let me just turn to Flavia. Go ahead, Flavia.

David, thank you for the question. Yes, we know there had been a lot of questions around script data during the fourth quarter. So I think as a reminder, and we talked a little bit about this in -- at the JPMorgan conference in January. The best -- if you were going to use script data, the best would be to use total Pods as that's the best reflection of the future revenue outlook.

If not -- if the total Pod data is not available, you can use total scripts. It will not capture potential changes to longer script fills, going from a 30-day to a 60-day to a 90-day, but it's also a good second best option. And then finally, you can use NBRx, but there is a little bit of noise on NBRx because of samples and also different channels. Specialty channel was not captured there as you use IQVIA data.

And then finally, in the fourth quarter, there's a little bit of, I would say, seasonality where you see higher volume going through wholesale with specialty pharma than in other quarters, which is not necessarily captured in script data, but affects revenue. So there are a few items that folks have to take into consideration when they extrapolate from scripts into dollars of revenue.

Okay. And then are you willing to provide the difference between new patient start growth and overall revenue performance?

No. We'll continue to provide, I would say, qualitative commentary on our -- the strength of our new customer starts, and we talk about them. Ashley just mentioned the strong performance in both U.S. and OUS and the continued growth that we see as we continue to expand penetration of AID, but we're not going to provide specificity on new customer start growth rates.

Your next question comes from the line of Larry Biegelsen from Wells Fargo.

Congrats on the strong finish here. Yes, I'm going to ask, I think Jeff's question maybe a little bit differently. So Ashley, you're guiding to 21% to 23% Omnipod growth for 2026, and you gave a 3-year LRP of 20% recently. So my question is, how are you feeling about being able to sustain the 20% growth in light of new competition?

And anything new you can offer on why you think investor concerns around competition are overblown? Do you think it's going to be harder for new companies to scale or compete directly with Insulet in the patch pump market? Or do you think their entries will have a rising tide effect?

Thank you, Larry, for the question. And again, I'm really pleased to see the confidence in the company even increased since our Investor Day that we shared in November. As we come as a company out of stealth mode to the position of market leadership, performance trumps everything. And again, I'll go back to some elements that I think are maybe underappreciated.

Getting regulatory approval is not really the definition of impact. And we have this 25-year head start with, again, $3 billion of investment that's enabled us a lot of knowledge, a lot of tech know-how, a lot of experience on scale. And I think in this marketplace, if you look at history, there's been a lot of attempts because it is an attractive market. But I will tell you, there are a lot of barriers to entry.

And those really come down to manufacturing at scale with high quality, it has to go to continuing to innovate with clinical performance and really unlocking the TAM. What's going to enable us to deliver the top-tier performance is by continuing to bring new users into this category. And our pipeline is specifically designed to bring new users from MDI into the category. And I think the biggest unmet need for us is to really start to improve the acumen among the clinical base, particularly in the U.S. of our strong clinical performance.

So in addition to being #1 prescribed and #1 most requested predominantly because of our differentiated form factor and user experience, we also want them to know and be well aware of just the strong proven clinical performance, both efficacy and safety and unsurpassed in the category. I think that will be new information for many more clinicians. And then I'm going to come back to just continuing to build on our commercial prowess as we go, Larry. Again, I think this company has been known as being really good at technology and really good at the supply chain.

What's perhaps underappreciated is this evolving commercial of having the largest sales force, selling on science, very strong. We're bringing new prescribers into the category. We have this beloved brand that we are activating. When we activate DTC, we generate record new leads into the category.

We're converting those leads into brand loyalty. They become new Omnipod Podders. And then we continue to have unparalleled access and affordability. We've been at this pharmacy for 9 years, and we've built remarkable relationships with the payers and the PBMs because we have very strong clinical and economic evidence.

And we're going to take that strength and continue because 100% of our portfolio is in pharmacy. So while others may be at the 10% or 30%, Omnipod has been at this for 9 years, and we'll continue to have unparalleled access and affordability. So thank you for the question, Larry. Flavia, go ahead.

Maybe -- just one final add is also the financial strength that we have. We have best-in-class gross margin, which has built through these investments that Ashley talked about over the years. We are free cash flow positive. And that strength allow us to continue investing in the business while at the same time being able to expand margins.

And that investment is in innovation. It is in unlocking the market with AID penetration and it's also in capacity to invest ahead of demand when you are in a disposable form factor construct.

Yes, Eric sitting here, as we shared, Larry, we've got $1 billion that we're going to invest in R&D in just the next 3 years. And we also are planning new next-generation platforms beyond the 3-year window to stay ahead.

Your next question comes from the line of Michael Polark from Wolfe Research.

I have a question on one of your sensor partners. So G7 is moving to 15-day from 10-day. Is this a different Pod for Insulet? Or is this the same Pod?

And if it's a different Pod, can you comment on the company's readiness to provide integration with the 15-day sensor? I'm just -- I'm remembering back to 2024, it took some time for the G7 Pod to become widely available and it kind of, I think, suppressed starts for a period of time before it was widely available. And so I'd like to understand the dynamics around the move from Dexcom to 15-day.

Thank you, Mike. And here's Eric, why don't you talk about our sensor integration?

Mike, thanks for the question. As a reminder, we were actually ready with the 15-day launch day 1 with Dexcom. So Omnipod 5 is compatible with the 15-day G7 now, and that's a great experience for customers. And one of the key things we've been focused on, as you know, Mike, is accelerating sensor integration for customers.

We were ready day 1 with 15-day. As Ashley mentioned earlier, we began the limited market release of our Freestyle Libre Plus integration just recently, and we're excited to bring that to market in the first half of 2026. And then looking ahead to Omnipod 6, recognizing this need to evolve even faster with the market, it's part of why we're designing one Pod that can be updated in market for faster innovation so that with Omnipod 6, we can always push the latest technologies directly to Pods that customers have. So we're accelerating innovation and sensor integrations now. Pleased to be on market with Dexcom 15-day and assuring that we're positioned to do that going forward.

Your next question comes from the line of Travis Steed from Bank of America.

You talked about changing your guidance philosophy. So I just wanted to make sure we had understanding of how you kind of set this year's guidance versus prior years and kind of what's been baked in into 2026 versus what's left for upside? And also, do you expect record new starts in Q1 as well?

Thanks, Travis. Flavia, over to you.

Yes. Travis, we continue to set guidance with a full intent to deliver. That has not changed. The guidance that we provided today reflects a balanced view of our outlook at this point.

And we will experience normal seasonality in the first quarter, which has been the case historically between fourth quarter and first quarter. But outside of that, we are very confident and pleased to be able to provide an outlook of 25% to 27% for the first quarter and 20% to 22% for the full year.

Your next question comes from the line of Joanne Wuensch from Citigroup.

ADA is going to be here before we know it. Is there anything in particular that we should look forward to there? And I'm also trying to key in on when are we going to get a line of sight on some of the clinical steps for Omnipod 6?

Yes. Thank you, Joanne, for the question. So let me maybe just tee up one of the things that we'll be sharing at the ADA, which is our -- from our -- data from our feasibility study EVOLUTION, which is around what we're calling our fully closed loop, which not all fully closed loops meet the definition of our definition. And I think it's important, I'm going to spend a little bit of time on this quickly, and then Eric will cover the others.

We are designing as the market leader with our big eyes focused on the underserved type 2 market in the United States, where we have 5% penetration and there's 5.5 million people on insulin, that we would like to be on AID therapy since the ADA guidelines recommended AID therapy as the standard of care. We have designed our fully closed loop to address the biggest barriers for those patients with type 2 to get on to AID therapy. It starts with our algorithm, which will be including no user intervention. It requires no dosing.

It has no meal time interactions, no adjustments while the Pod is worn. There's 2 other areas that are really important to the type 2 user base who -- one is the clinicians. And the clinicians, this will require no defined settings at start, which is a big barrier right now to the primary care prescribing base that just don't have the time to go input all of those settings. And then third, Joanne, the big unlock is patients don't have to do 2-hour training.

This is something that they can initiate on their own. So our combination of really modernizing the training so that they can do it at home on their own time without 2 hours, really unlocking prescriber adoption, not having to put in settings, really important for the primary care audience, which is really who's going to be managing patients who have type 2 diabetes. And then third, really a very CGM-like experience for people with type 2 diabetes. So we're going to be sharing our data from our feasibility in -- at the ADA.

But in addition to that, we have some -- our third-generation algorithm and Omnipod 6 that Eric will touch on.

Joanne, just building on Ashley's comments about what's coming at the upcoming congresses. So at ATTD, we'll be showing the evolution data, as Ashley just described, on our way towards that truly transformative fully closed loop system to unlock primary care. We'll also be showing some health economics data showing favorable outcomes in ER visits for the unique fully exposable experience that is Omnipod as compared to tube pumps. So really excited for what's coming at ATTD.

Looking ahead to ADA, that's where we'll be publishing the pivotal results from STRIVE. That's the pivotal study that supports Omnipod 6, excited to be reporting that out. And in addition, Ashley mentioned this earlier, but there are more independent third-party studies comparing clinical results of on-market AID systems coming out. And in 2 recent of those, Omnipod has shown unsurpassed A1c and similar time and range to those reporting time and range using an iCGM sensor.

And so one of the other things that we're paying attention to is that it's really important to interpret clinical data based on A1c, and it's hard to compare across studies that don't use an iCGM sensor for time and range. And so there's more of those studies coming out, and you'll see us talking about those too.

Your next question comes from the line of Richard Newitter from Truist.

Congrats on the quarter. Maybe the first one, just your type 2 mix, I think you said you exited the year at about 40% of new patient starts. I guess that would seem to imply that your type 1 segment maybe saw moderating growth leveling off in the single-digit range. I guess, is that the right way to think of it going forward?

And if so, what is that? Is that share? Is that just the market kind of starting to moderate and we're getting near maturity? And then I have a follow-up.

Yes, I'll start and maybe Eric can add. So yes, we had very strong type 2 performance in the fourth quarter, and there was a continuation of that strength throughout the year. We had record new customer starts for both U.S. and international, both year-over-year and sequentially. To your point, Richard, type 1, it grew nicely year-over-year, and it was comparable to the third quarter, which was a record quarter for us in NCS.

The level of penetration, obviously, in type 1 is higher than type 2. And as we continue to bring AID into those markets, you will see accelerating growth in type 2, just given that it's 5% today versus type 1 at 40% penetration of AID. But we continue to source a lot of our volume from MDI, as we talked about, 85%. And that's really our strategy to drive that penetration in those customer segments and internationally, which is also still very underpenetrated. Eric?

Yes, Richard, thanks for the question. I think as Flavia described, type 1 in the U.S. is more penetrated and the level of new customer starts in the market is high. And so it continues to be a significant driver of growth. Ashley described it well.

We've got a balanced growth portfolio and type 1 is a big part of that. Type 2, the level of new customer starts in the market has been low, and we are accelerating that as we launch Omnipod 5 with type 2 and did so over the course of 2025, which is why you saw mix grow. You also saw our type 1 new customer starts outside the U.S. grow significantly year-over-year. And those 3 levers, U.S. type 1, U.S. type 2, international type 1 are going to contribute a balanced contribution to our growth over time.

Okay. That's helpful. And maybe can you -- following up to Travis' question, can you put some assumption bars or around the upper and lower ends of your range? Or maybe said another way, what would have to happen to the biggest needle mover in your assumption set to be at the upper end or above?

Well, we provided a guidance range. So to me, that is the upper and lower end of the bar that you're describing, Richard. And I think we obviously, as I said earlier, we continue to set guidance with the full intent of delivering, and this is our best outlook at this point, given where we are in the year. Obviously, if we can advance AID penetration even further and faster, that will translate into us being closer to the top end of the range.

Your next...

We have time for one more question.

Certainly. Your final question comes from the line of Danielle Antalffy from UBS.

Congrats on a strong end to the year, ladies plus Eric. So my question is on the competitive moat. Ashley, you touched on this earlier. I do think it's underappreciated.

I specifically wanted to see if you could talk a little bit about the sampling at the physician's office and sort of if you could walk through how this works, like who trains the patient to ensure they get the optimal experience? And I appreciate it's still early, but what are you seeing for capture rates with that program?

Thank you, Danielle, for the question. And I guess just for context, again, I think the company is best known for just having really differentiated technology and investing ahead of the curve in supply chain and maybe pioneering this pharmacy pay-as-you-go model. And what I would like to see at the end of this year is a better appreciation of the commercial prowess that we've been building over the past couple of years. So we have been expanding our sales force.

We expanded it around 25% last year. We're continuing to do that. We call on over 17,000, so full coverage of the endos, really 10,000 of the highest prescribers. And what we're evolving is our messaging, as I mentioned earlier, in addition to selling what they've come to love, which is really this differentiated technology platform that's simple and easy to use.

It's why it's the gateway to the category to new users, it's easy for them to explain. It's also coming to educate on our really strong clinical performance, and we will continue that messaging in 2026. To make it easy to get people on Pod, we're really the only AID offering that can get people on a sample. So in -- right in the practice, they can go put a Pod. It's a very capital-efficient way for us to initiate trial.

We've gotten a lot of really good feedback both from young children as well as grandparents around once -- it's kind of that moment of delight. Once they try it on, they get the, wow factor, and we have very strong conversion ratios. In addition to the called on universe, we also have this darling brand is what I say that I think is a bit underappreciated where we activate directly to consumer, make them aware of the category, make them aware of Omnipod 5 and people go in and ask their doctors for that. And they specifically ask for Omnipod, and that's a new category user.

And we -- those then become new patients, but they also become new prescribers. And that's why you heard us talk about when we ended the year, we had 30,000 prescribers writing for Omnipod, which is up 28%. And we're going to continue that flywheel of really creating the market and creating demand for Omnipod. Thank you for the question, Danielle.

And this concludes our question-and-answer session and today's conference call. We thank you for your participation, and you may now disconnect.