Insulet (PODD) Benefits From Omnipod 5 Launch, Expansion

·4 min read

Insulet Corporation PODD continues to gain on solid prospects in the diabetes market. The company is progressing well with respect to its four-pillar strategy. The stock carries a Zacks Rank #2 (Buy).

In the past year, Insulet has been outperforming its industry. The stock has risen 22.4% compared with the industry’s 17.2% decline.

Insulet exited the fourth quarter of 2022 with better-than-expected earnings and revenues. The company’s performance benefited from record quarterly U.S. and total Omnipod new customer starts.

This was driven mainly by a strong start to the U.S. full market release of the Omnipod 5 automated insulin delivery system. The company recently achieved the milestone of 360,000 estimated active global customers using the Omnipod System, including more than 100,000 customers in the United States using Omnipod 5.

Insulet has been progressing well with respect to its four-pillar strategy. In terms of the first strategy of access and awareness, the global diabetes market is growing rapidly, with millions of people expected to be newly diagnosed in 2022. Further, there has been rapid adoption of CGM among people living with Type 1 and Type 2 diabetes.

During the fourth quarter, the company witnessed continued uptake of Omnipod through the U.S. pharmacy channel. This includes growing contribution from Omnipod 5 and a premium for the pod, given the PDM is provided at no charge in the pharmacy channel. Omnipod 5 and Omnipod DASH’s new customer starts combined were 100% of the total U.S. new customer starts, comprised Omnipod 5 at over 95% and Omnipod DASH at almost 15%. In addition, pharmacy channel volume increased to almost 80% of the total U.S. volume. Insulet continues to drive increased awareness for Omnipod through its direct-to-consumer advertising campaign in the United States and across select international markets.

Insulet Corporation Price

Insulet Corporation Price
Insulet Corporation Price

Insulet Corporation price | Insulet Corporation Quote

In terms of the second strategy of delivering consumer-focused innovation, Insulet’s sales and marketing teams and international expansion efforts are aligned with its long-term growth profile. The company is focused on advancing with its initiatives. Notably, Insulet will continue to work to expand access to Omnipod 5 as well as increase the total addressable market for the Omnipod platform. During the quarter, Insulet completed its type 2 pivotal study protocol with the FDA and received IDE approval. The company plans to start enrollment in the three-month study in 2023. There will be a targeted focus on recruiting diverse and underserved populations to demonstrate the safety and efficacy of Omnipod 5.

Insulet currently has a robust product pipeline, including the next generation of Omnipod 5 platform. The company’s integration work with Dexcom's G7 and Abbott's FreeStyle Libre has also been progressing well.

On the flip side, during the fourth quarter, the substantial fall in Insulet’s Drug Delivery sales is discouraging. Contraction in margins does not bode well. On a year-over-year basis, the company expects gross margin to be impacted by higher costs associated with the U.S. manufacturing ramp, product line mix due to the ramp-up of Omnipod 5 and lower drug delivery revenues. Supply chain disruptions and inflationary pressure continue to challenge business operations.

Gross margin of 58.8% contracted a significant 1051 basis points. Meanwhile, selling, general & administrative expenses rose 18.6%. Research and development expenses rose 18.4% year over year.

Key Picks

Some other top-ranked stocks in the overall healthcare sector are Haemonetics Corporation HAE, Catalyst Pharmaceuticals CPRX and Avanos Medical AVNS. Haemonetics and Catalyst Pharmaceuticals each sport a Zacks Rank #1 (Strong Buy), while Avanos Medical has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Haemonetics’ stock has risen 29% in the past year. Earnings estimates for Haemonetics have remained constant at $2.94 in 2023 and $3.29 in 2024 in the past 30 days.

HAE’s earnings beat estimates in all the last four quarters, delivering an average surprise of 10.98%. In the last reported quarter, it reported an earnings surprise of 7.59%.

Estimates for Catalyst Pharmaceuticals’ 2023 earnings have increased from $1.17 to $1.42 in the past 30 days. Shares of the company have increased 102% in the past year.

CPRX’s earnings beat estimates in three quarters while beating the same in one, the average surprise being 3.35%. In the last reported quarter, Catalyst Pharmaceuticals delivered an earnings surprise of 4.76%

Estimates for Avanos Medical’s 2023 earnings have remained constant at $1.68 in the past 30 days. Shares of the company have declined 15.2% in the past year compared with the industry’s fall of 16.3%.

AVNS’ earnings beat estimates in all the trailing four quarters, the average surprise being 11.01%. In the last reported quarter, Avanos Medical delivered an earnings surprise of 25%.

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