|by Debbie Wang | 10 Feb 12|
Insulet PODD posted fourth-quarter performance that was consistent with our projections, and we are inching up our fair value estimate to $16 per share. Nonetheless, Insulet's shares remain slightly overvalued, from our perspective. Insulet's revenue growth of 57% during 2011 came very close to the 58% we had estimated. Manufacturing and R&D expense came in a bit lower than we had expected, but this was offset by slightly higher-than-expected spending on sales and marketing. Our projections for 45% revenue growth in 2012 falls right into the midpoint of management's outlook.
Insulet is on the cusp of a big transitional year, now that its next-generation OmniPod has received regulatory approval in Europe, and we expect FDA approval to come along by this summer. Management has set out an ambitious goal of converting all the current OmniPod user to the new product by the end of the year. We stress that there are a number of hurdles for Insulet to hit its objective. First, the firm currently only has one production line that is producing limited numbers of next-gen pumps. Insulet needs to ramp up production on that line, and add two more production lines by the end of 2012 to have capacity up to one million units per month. Second, the firm already has pushed forward to bulk up its sales and marketing staff by approximately 24 new additions. Once hired, the new personnel will need to be trained; management aims to have this group ready to hit the pavement by the end of first quarter. Insulet is also looking to leverage its new relationship with Ypsomed in Europe with the roll out of this next-gen OmniPod. Finally, the timing of recent device approvals at the FDA has been delayed in some cases. Both Edwards Lifesciences EW and St. Jude Medical STJ received FDA approval later than expected on key new products. Although Insulet has responded to the FDA's questions coming off its initial application for the next-gen pump, it is not clear whether exactly when regulatory clearance will come. We expect FDA clearance in the first half of 2012, but it could be later. If Insulet is able to hit all its mile markers for the next-gen OmniPod in the first half of the year, then we could see top- and bottom-line growth accelerate in the second half.
The New smaller PODS are long being waited... Let's see if they will really apear this year.
Can't wait. FDA needs to approve this SOON!!!
woo hoo, let's go people!!!!
Did I read right that they want to have everyone switched to the new system coming out? I just started the newest OmniPod in October 2011. Are they going to allow some type of discount for switching because I had a hard enough time getting my insurance to approve me staying on the pump after my insurance change at the beginning of the year?
My understanding is switching to the new system won't cost extra. Apparently the new pods will be cheaper to make, so Insulet plans to include the new PDM free as well. I don't think the insurance authorization or billing will change, at some point, Insulet will just ship new pods in your next refill.
I agree w/ Don. It's my understanding that Insulet plans to put the new PDM in with the first shipment of new pods as they go out to each existing user for no extra charge (which may cost some to make and distribute, but which ultimately will help them continue to thrive as a company as existing users continuing using their new pods which as Don mentioned are cheaper for them to make, which will increase their profit margin).
I am in Canada and was told that there would be a nominal fee to upgrade.
I read (don't remember where) that in UK you will pay something for the new PDM, but it will be paid back by discounts on pods in the following year.
I think it's a way for Insulet to spread the initial costs over a period of time.
They earn 30% more by selling newer pods, so they need badly to "migrate" all their customer base to new pods as soon as possible (they never got one year with profits, only losses till today).
This was my post from May 2011. One of the quotes from Insulet in the 29th minute of the recording is...
Question: "When you start shipping, will Abbott pay for some of those upgrades? How's that going to work? Are they going to cover that cost for you? Or is this going to be the patient will have to upgrade... if they are on a gen 1, or they bought in the last 12 months... into an upgrade program, what are you thinking at this point?"
Answer: "What we're planning on doing is we ultimately want everybody to have the benefit of this new product. Certainly there is some financial benefit for us to do so, so we will ultimately, over a period of time like a six to 12 month roll out, once we launch, here in the US for example, effectively move everybody over to the new product, so we will supply the customer with a brand new hand-held (PDM) to accompany the new product. Keep in mind that the savings that we will generate on that first reorder is enough to effectively offset the cost of the hand-held (PDM). So in the first quarter of launch there won't be any margin improvement because they'll net each other to zero, but beyond that, we will receive all the margin improvement that we've been talking about. From an ROI perspective, that's a pretty quick payback."
ok, nice, I wonder if the cash cost will be any less? we pay cash 299$ a month... Perhaps if i buy omnipod more omnipod stock, I will feel less ripped off...
Kidding, my daughter loves her pod.
I wonder if this lower cost for pricing will assist in getting a medicaid/ medicare contract, it will give them more wiggle room to negotiATE..
Stupid question but we are on our 4 th yr with the 1st gen original pdm. will we still be able to get the same pods once the smaller ones are out?
They will pass everyone on the new pods as soon as they can (insulet hopes to do it within 2012).
Insulet wants to produce only the new pods, they cost less to manifacture and they said it will take them 3 months of pods to even the cost of a new PDM given to a customer.
Besides the smaller size of the Pod, what other innovations can be expected from the next-gen? I am really looking forward to the smaller pods as the current ones do still get in the way. I had to revert back to my Animas pump for about a month until I could afford to get more pods and realized that even though I was tethered, I really loved the small "foot print" that the infusion set had compared to the OmniPod. I was really debating switching back to the Animas but I have invested so much time in the Omnipod getting the settings just right and finding comfortable places to put it on my body that I decided to continue on with it. (Omnipod has not taken into consideration people that are not slender. Fat rolls DO impact where you can place the pods without having them either get in the way or get dislodged. Fortunately, I have finally found a way to start shedding the insulin weight that I have put on over the years! YAY!!!) All in all, I have been happy with OmniPod but will be very excited to get the smaller pods in the mail when they are released.
The new pod is smaller (1 cm shorter, only 3 millimeters thinner), has a blu canula (to see better occlusions ...) and the PDM can be up to 7,5 meters in open air (1,5 meters through your body).
What I hope best is it has a higher and steady manifacturing quality and quality control before going to market...
Sounds good! Perhaps that is why I am getting so many of the current pods from Liberty medical!