Excellent. Welcome everybody. Day two of the London Healthcare Conference for Bank of America. I'm Dan Lundquist, the Global Healthcare Specialist based in New York, and very pleased today to have MiniMed with me. We have Que Dallara , Chief Executive Officer, and Chad Spooner, Chief Financial Officer, with me up here for a fireside chat. So with that, let me kick off. Maybe first, just touching on post the initial spinoff, MiniMed's entering a new phase with recent innovation, reaching patients in the broader portfolio, moving increasingly towards commercialization. What's changed the most fundamentally? Why should investors view MiniMed as a growth company today? Maybe we'll start with Que.
Yeah. Well, Dan, thanks for having us. What's really fundamentally changed, I would say, is really two things. One is we've really kicked it up a gear. You can see that in our last 12 consecutive quarters of high single digits, low double-digit growth. We've pushed a lot of the pipeline that we committed to at the IPO to the left. We're ahead of schedule. I think that's a lot more visible. Being a public company, we're able to talk about it a bit more now. I think those two things have been pronounced. This market is huge. It's $19 billion, growing double digit. We're playing in a very attractive space. Got an incredible pipeline that we're executing on right now.
We're seeing U.S., for example, accelerate. Our international business continues to perform consistently. When you take all those elements together, we're not a mature business in a middling market. We've got an unbelievable pipeline and growth market, and really what you're looking at is the next phase of growth for MiniMed.
You have seen an acceleration in the U.S. business. Just maybe touching on that, it began with the launch of Simplera Sync sensor. You have launched now Instinct, which is the 15-day CGM from Abbott. You will have Flex coming, which is a new durable pump. It launched with Simplera a few months ago, and with Instinct last month. How should investors think about the durability of the growth? I think that has been a big theme within the med tech world is not just acceleration durability of that acceleration.
I think it is a great question how you phrased it. If we take a step back, the way I think about it is, what you are seeing in the U.S. is really an early step in a cascade of launches that are happening. You kind of rattled down the list. It is not a single product. We just launched Simplera Sync with Flex really for five weeks of Q1. We are just really in the early innings. As we execute on the pipeline, and certainly as we roll this out around the world, that is what is really fueling the growth and our confidence in the future.
I believe you have called it third generation of MiniMed. Maybe you can talk about how you brought together smart MDI, durable pumps, patch pumps soon to come. Sensor choice, one app, CareLink. There's a lot that you've brought together in that ecosystem. Why is it so important to have all of those pieces within the single ecosystem rather than as standalone products?
Look, I think when you list all the products, it can often sound like a laundry list. I think maybe I can help with a governing thought of there are really two axioms, like why we have the portfolio we have. There are two fundamental things that are true today and will be true in the future. The first one is the fact that not everyone who has diabetes wants the same thing. People have different lifestyles, they have different needs. They have different things they respond to that fit into their lives. We don't believe in force-fitting people with diabetes to one single product. We think we need to offer choice for the thing that fits their lives. So that's the first thing. That's not going to change because it's different strokes for different folks.
The second one is that the direction of travel for where the industry is going is simplification. People want a simpler user experience. Diabetes is hard enough, let alone making technology yet another burden someone has to deal with. The user experience needs to be easier. More of the automation needs to happen in the background, less burden on the part of the patient. Those things are true today, and they will be true tomorrow. So in the context of that, when you think about the portfolio that we offer, we are really providing a very compelling value proposition in that you do not need to leave MiniMed to pick a therapy that works for you. We have three different dosing hardware options, whether that is a smart pen, you do not want to be on a pump at all.
A durable pump for when you want to disconnect. A patch pump that we have in development. Then we have one single app that drives all of that. We have one support phone number, one algorithm, one CareLink healthcare portal for patients and providers. You do not need to leave MiniMed if you want to pick any of those options. So that is fundamentally the portfolio we have. It allows us to address pretty much everybody in Type 1 and Type 2, and allow them to have an incredible experience with less burden and the great outcomes that we are known for.
Maybe shifting to some of the different products within your portfolio. So the Flex launch. You newly launched Durable Pump, the first major pump hardware and software refresh in more than a decade. What are the early indicators telling you about the ability for this to expand the U.S. market position?
Well, I have been in the field a lot. Qualitatively, it is a great product. We are very proud to launch it. It is a massive upgrade, as you said, first one in about a decade. It is not just the hardware, it is also the software. People are saying this is very easy to use. They are actually very surprised at how simple it is. The software is very intuitive. We are getting invited in with a lot of accounts to share within the do teach-ins and share within the product. We now I understand a lot, this is very much resonating.
Then when you combine that with the data we shared, the metrics we shared at the last earnings call, with over 20% unit growth in the U.S. just with the five weeks, and just with Simplera, we did not even have Instinct in Q1. The reception has been very positive.
Fit, been a lot of buzz about it's your next generation patch pump. I believe you've said the full launch is expected in the summer of next year. How should investors think about Fit as more than simply another entrant in the patch category?
We don't think it's just another entrant. We think it's a truly differentiated patch system that we're bringing to market, and we've worked very hard on this. I think if you look at the patch pumps, clearly there's a secular interest, especially from people on MDI who are looking at pump therapy, that they perceive it as a simpler device. Again, the direction of travel being simplicity of the system. That simplicity isn't just not having tubing. It's the overall experience from how you're onboarded, how the algorithm works, the software experience, et cetera. When we have done our own research, the feedback we hear is really three fundamental gaps in what's available today and what is available that we see in the market from others.
One is the size of the reservoir, and that's important especially for adults and people on Type 2 that have high insulin needs. I believe today we're really the only ones introducing a 300 unit reservoir in our patch system. Second part that people often ask for is they ask for longer wear. You see that trend in CGM. Our intent is to have an up to seven days of wear device. For kids, that means they get the full seven days, for an adult, maybe five days, and if you're a Type 2 patient, you have three or four days, something along those lines. That's important. The reason why that matters is because you're inserting yourself less if it lasts longer.
That's important because it means you run out of real estate on your body for insertions. You have more time between insertions for the body to heal at those sites. Lastly, people want the wonderful algorithm that we have, our automation, our Meal Detection technology, our auto corrections every five minutes in a patch form factor. We'll be able to offer that to the market. We think that's truly differentiating compared to what we've seen in the marketplace.
In terms of manufacturing and your capacity, you have talked about 20,000 Fit patients at launch. You are already preparing additional capacity. Beyond that, what gives you confidence in the ability to launch and scale the platform?
By doing it. We can put a lot of things on paper, but fundamentally, we have to demonstrate that we can hit the output targets we want, that we are hitting the yields and the cost. But one of the reasons why patch pumps have been very difficult is not necessarily technically doing it, although that is complicated, but it is really scaling up manufacturing. We are making a sterile product. You have to be very good at sterilization. You have to be good at high volume manufacturing. Those two things we have a lot of experience doing with our consumables and our CGM. We are translating that into the patch product. But at the end of the day, we have to demonstrate this.
The lines are up, we are running water through the pipes, and that is what gives us confidence that we will be ready at launch with at least 20,000 patients.
Thinking about the interplay and coexistence of Flex and Fit. Patch pumps have been outgrowing durable pumps over the last several years. Many patients, however, do appreciate and like the patch pump, the smaller on-body footprint and the disconnect ability. Why can both Flex and Fit grow?
Well, again, it's different strokes with different folks. You have people who really, 1.5 million people globally today who are on durable pumps. They do not mind the tubing. In fact, the tubing is, as you say, it's a smaller one euro coin type profile on your body. People prefer that. They can wear the pump wherever they want, and they can disconnect from it for different activities like swimming or you want to take a shower or something like that. There is a lot of reasons why people pick that. 1.5 million people have picked that. I do not think that is going away. I think a lot more new to pump therapy prefer the patch. We see that for sure.
We want to offer both. Honestly, the more choices there are, the more options that MiniMed has to grow and address a bigger part of the market.
Got it. Maybe shifting a little bit to the Vivera and the algorithm differentiation. You talked about how important software is. Vivera is MiniMed's third generation fully closed loop algorithm for Type 1, Type 2. The U.S. pivotal trial is fully enrolled. I believe you are intending to launch sometime in the second half of calendar 2027. On both Flex and Fit. How do you think the Vivera could change the overall AID experience?
Vivera is not just another algorithm. It has been a dream that we have had since the first automated insulin delivery system came to market with 670G, about 10 years ago. Our belief is that it is going to change the game. Because one of the biggest, when you talk to someone with Type 1, with the burden of diabetes management, they have to dose a drug every day, 24 by 7. There is no break. The biggest complaint they have is to take away the mental burden from having to do meal bolusing. Knowing it is not lunchtime yet, you do not even know what you are having for lunch. How do you know how much is in the panini you are going to have? Being able to remember that and constantly making those mental adjustments.
Removing that is going to be a very big deal, in terms of reducing the burden of diabetes management. That is what we are trying to do with the Vivera. What we are studying is removing completely. You are not making any meal announcements. You are not saying, "I am eating now." You are not putting an emoji in, you are not doing anything. No input whatsoever, and still being able to achieve, for Type 1 above 70% time in range and for Type 2, possibly higher. That is ultimately the goal. Because today, if you think about what AID is in the market, people want freedom from disruption. They do not want alarms and alerts. They do not want micromanagement. They want freedom from micromanagement, because most of these devices are telling the patient what to do all the time.
They want something that works in the background. That is our goal with the Vivera. The easier we can make AID, the reason why we are very excited is that the bigger the market will be, because more people will be willing to consider AID and pump therapy if it just works for them in the background. All they have to do is put insulin in the pump and wear it, and getting on therapy just needs total daily dose without all of the programming and rigmarole that needs to go into it today. This is a big game changer. It is not just another algorithm with just a little better performance. It is fundamentally like a self-driving car where you are removing the driver from it.
You mentioned the time and range, in Type 1s above 70%. I think it was 74%. What are the clinical and commercial significance of maintaining those strong outcomes while reducing burden?
That's what people want. People don't want to have to choose and make a trade-off between great outcomes and convenience or simplicity. You want both. Why should we deny someone with diabetes? Everyone that has diabetes deserves a system that delivers the best health outcomes that is easy to use. That's why it's clinically important. It isn't just a convenience feature. Our goal is to really deliver both. We're not just trying to remove meal bolusing, in a safe way. We're trying to drive better outcomes without the need for as much input for the reasons I described. That's what we're saying.
Maybe just thinking about the algorithmic architecture and how that differs, right? You're mentioning this isn't just another algorithm. So you took a differentiated architectural approach to AID than many of your competitors. How is the architecture different and why does that matter? Both outcomes and patient firm.
Look, one of the advantages of MiniMed is that we have CGM data and we have insulin data. From the very beginning, the holy grail and the dream of the artificial pancreas was to ultimately get to where we think the Vivera will be. We always try to build a system that, try to mimic what a pancreas does. How does a pancreas work? A pancreas magically knows how much you're eating and knows how much insulin to secrete in order to convert that to energy. It's just magic how it works. That's what we try to do. That's why you have this concept of Meal Detection technology. Every five minutes we're doing a forecast of where we think the patient's going to be in terms of their glucose level.
As a result of that, we provide a recommendation for dosing, and we make that automatic. It's the only system on the market with Meal Detection technology. In other words, if you forget to bolus, which we always recommend you do, but if you forget to bolus or you miscalculate how many carbs you have, there's a lot of forgiveness in the system. With the Vivera, we're taking that a step further to remove the bolusing function completely. That's the experience over the last 10 years, and it's due to the fact that we have the full stack of all the components of AID that allows us to do that. Architecturally, it's very sophisticated. The other thing I'll mention is that we're not just trying to solve for removing meal bolusing.
What we see in the market are really two sort of ends of the spectrum of people with diabetes. On one hand, you've got people who don't want to have it, and they are teenagers. They don't want to do anything. I have a teenager, can't get her to do anything. Getting them to bolus is probably impossible. We want a system where it will work for those people who don't want to be engaged whatsoever. But on the other end of the spectrum, you're going to have people who care very much about their diabetes and their glucose control. They're going to be super conscientious about it. For those people, our algorithm will allow for optional bolusing because they don't want just 70%, they want 80%, 90% time in range.
The algorithm can accommodate both. The reality is most people will be somewhere in between. Some days they won't do any bolusing, some days they might. Our system can really, it's like a dial. It's not just an on and off switch. It's not just a simplification. It allows, it actually accommodates users. We're going to be removing meal bolusing, getting you at least 70%, but if you want more, you want to engage, our algorithm can handle that as well. That's what's special about Vivera.
I have a seven and five-year-old, and they don't listen either. Maybe shifting to Type 2s and market expansion there. Type 2 patients, I believe, are somewhere around 40% of your U.S. new starts. What have you learned about the products and support these patients need and seek?
We've had Type 2 labeling for a long time, so we understand the profile. I think with a lot of Type 2s, they want it to be simple. I'm generalizing, so call it not part of anything, but oftentimes, just on average, don't necessarily want to engage as much as Type 1s. Type 1s start when they're kids. They kind of know it's very important to manage their diabetes. They want it to be simple. I think the two drivers for keeping Type 2s on therapy and being successful really starts with product market fit. You want a product that suits Type 2. It's got to be simple to use, usually should have a larger reservoir, and the automation's working in the background. Our system provides that. Flex has a 300-unit reservoir for that reason.
It's got great automation. It's got the Meal Detection technology. The app is super simple to use. That's one piece. The second piece is the product itself is not enough. You really do need to support the patient. For many, many years, really decades, we've always had an onboarding program called StartRight, and the critical period is between when you start to that first six months, and we have regular check-ins to make sure that patients can get on therapy very quickly, that they're doing well, and if there's any troubleshooting needed, we can handle that. Then post six months, we have a program called Stay Right, and again, it's strategic touch points, education, encouragement, things that help the patient stay on therapy and be successful.
It is really the combination of those two things that honestly we have been doing for years, that really help drive retention in Type 2s.
It is good that you mentioned retention. One of your competitors has recently discussed execution challenges and retention in its own Type 2 business. What are you seeing in terms of your retention trends? What gives you confidence in how your approach is differentiated?
Dan, do you want to answer that, Chad?
We have actually seen from a Type 2 perspective, we have had Type 2s for a while, and the trend has actually not gotten worse. It is always a little bit more than Type 1s. That is just going to be across most of the business. But we have seen a slight improvement actually in our retention rates in Type 2s over the last few quarters, so we haven't seen it going the other direction.
What would you say is how your approach is differentiated maybe versus your peers on that front?
It just comes down to what I just mentioned. You want the product to fit the need of the patient and not force fit, say, a smaller reservoir for patients that have high insulin needs. That is what our 780G has a 300-unit reservoir, Flex has a 300-unit reservoir, and Fit will have a 300-unit reservoir for that reason. We published something in Diabetes Care earlier this year with Type 2s that did not bolus, again, we recommend bolusing, and they were getting above 80% time in range. The algorithm is very effective in working the background and reducing the amount of engagements that patients have to do. That is also important for Type 2. Product market fit is important.
Then the programs like I mentioned. People can get sick, and they get into challenges, and that is why we have a clinical field team, we have a tech support team that can handle troubleshooting 24 by 7 in 26 languages for that reason. That helps drive retention because people feel supported. It is not enough just to have a device.
You sort of mentioned 26 languages, but just the broad commercial scale. You have thousands of commercial and service professionals. You're in 80 something countries. How does that infrastructure strengthen the opportunity behind the overall portfolio?
It's hard to do multiple things at the same time really well. The great news is we've got an unbelievable commercial presence in 80 countries. We have a lot of scale. At this moment in the company's history, we have an incredible pipeline that is coming online right now. As you mentioned, you listed a long list of things. It really is this rolling thunder that we can put into our channels and into our sales team. It's honestly the richest portfolio in the company's history. We're ready to go. We're not trying to do that in addition to adding more salespeople in markets that we're trying to expand into. We're already in those places. We have scale presence. It's a matter of executing well on the launches, as these new products get clearance, and approvals.
Maybe we'll segment sort of U.S. strategy versus OUS. With the U.S., the pharmacy strategy, you're an accredited DME supplier and licensed pharmacy. Many of your products like CGM, consumables, 780G, already go through that channel. How should investors think about the pharmacy strategy for MiniMed?
We think pharmacy is a huge opportunity. It really does expand access and certainly makes things convenient for patients and providers. We think of it as a market access expansion, not a replacement of DME. A lot of health plans in the U.S. won't allow pharmacy coverage, even if it's on the formulary for things like durable pumps, for example. DME is going to be important. We see pharmacy as a huge, incredible expansion of access. We are a licensed pharmacy, and we have products going through pharmacy today. We have our CGMs going through pharmacy, at very comparable prices to where DME is. We have consumables going through pharmacy. MiniMed Go with InPen goes through pharmacy, and the intent is Fit will go through pharmacy as well.
We do not have to build new pharmacy capabilities, we have that today. The great thing about being a DME provider and a pharmacy provider is that the physician can write an electronic script, send it directly to us. We can dispense the product and ship direct to the patient. Again, it goes back to, Dan, your comments around retention. It allows us to trace the patient directly from the beginning of the lead, all the way until they are on therapy and successful, with our channel approach in DME and pharmacy.
Understood. Maybe shifting to sort of the OUS growth sustainability. It has been a low double-digit underlying growth story. It is 70% of revenue. I think frankly, it is underappreciated part of the story. What makes that position durable as competition increases, Flex against its European rollout?
We have a very strong commercial capability, and we know how different health systems work in different markets. Some are tender markets, some are insurance markets like Germany, and you have national formularies as well. We are very capable from a regulatory and a reimbursement standpoint in those markets. We already have people on the ground. We know the local providers, the local communities, et cetera. We are already set up. It is really a matter of launching new products in there. I think there is a bit of perhaps a misconception that we do not have any competition, and that is certainly not true. If you look at say the top 10 markets in Europe, these are contested markets.
We see competition all day long and scale competition, and we are holding our own. I think with new sensors, the product pipeline that is coming, we expect to continue the performance that you have seen in prior quarters and years.
Great. Maybe shifting a little bit to just sort of the financial and growth and profitability aspects. You have been investing behind Flex, Fit, Vivera, sensors. There is a lot going on. We have talked a lot about it, all while targeting profitability expansion. Maybe for you, Chad, structurally, how can the company invest appropriately for growth and still generate operating leverage?
We think that the actual investment in growth is what is driving the profitability. As we have invested in all the new products, that is what is driving the growth of the business. As you see that growth happening, we have been able to do that while maintaining a very disciplined control around our CapEx, our sales force, and our R&D costs. Que has mentioned that we are already in 80 countries around the world, so we already have that infrastructure. As our business grows with these new products that we have invested in, we are seeing that leverage because we do not have to continue to grow our sales force the same way.
The same thing happens within R&D. We do everything across a common platform, and you will see a lot of us leveraging different products in that we build them up, the components within our R&D. As we have expanded our business and we have launched five new products, we have completely refreshed our portfolio and able to do that while delivering operating leverage. We think that that investment is driving the top line, whether it is products or the sales force, and that we are getting operating leverage from that year in, year out.
Understood. I think that partly draws on the fact that the technology and commercial platforms across Go, Flex, Fit, Vivera, et cetera, share all that same sort of common architecture. We came back to that point. How should we think about the financial leverage that is coming from the common architecture?
Yeah, it's actually been one of the things we've really benefited from. If you take anywhere from 780G to Flex to what we're putting into Fit, it's very common, whether it's the reservoirs, whether it's the electronics, whether it's the infusion sets. We use that common platform across our products, so we're not redeveloping things. We're not having to invest in new CapEx. There's really a huge leverage effect of using that common platform. We have a common app, as Que talked about, across all three of our insulin dosing devices. It's by doing these products that we have that have commonality between them, we're not reinventing the wheel every time. We're seeing a lot of leverage from a cost perspective there as well.
Maybe kind of thinking about the economics across the ecosystem. CGM and consumables are more than 80% of revenue. CGM attachment reached 69%, I believe, in the first quarter. How does expanding the pump install base improve the overall quality and visibility with the financial model?
We feel that we've got a unique model, right? Our ecosystem allows us to grow revenue from install base growth and from attachment rate, which is a unique thing in this space. As we add to our installed base, everyone who comes on AID also gets one of our CGMs, so they get the benefit of AID. With that, our attachment rate grows. We think that's a compounding effect of getting someone in our IB and increasing our attachment rate, we get much more durable revenue and our share of wallet grows as well as just not the number of patients, but the share of their pocket grows as well. It's what we think is really a great compounding effect of having the ability to grow that attachment rate.
As you look at our portfolio, we do have some people on legacy systems, and as they convert over, you will continue to see the attachment rate grow, and that will continue to drive growth as well.
When you think about the cash profile, reported cash flow currently reflects the separation standalone build-out activity. How should we just think about the underlying cash generation as you exit the transition services and the business scales?
Yeah. So obviously we believe that while we are going through the separation, the cash used there is not indicative of a go-forward business, right? You are going to have things to set up the business, IT structures, and other things related to the TSA. As we come off of those, you are going to see a business that is generating not only more profitability, but also much more stronger free cash flow generation. We have seen it already in terms of there is certain items that we have used, and we are really well capitalized, right? We are in a very good position with over $200 million of cash at the end of last quarter and a credit line of over $0.5 billion to be able to afford us not only through this, but for the future and beyond.
We are very optimistic. We believe that we are going to be in great position as we exit the TSAs with Medtronic to continue to grow our cash flow.
There is a lot going on from an innovation perspective, scaling up your commercial platforms, et cetera. Given the broad internal roadmap, how are you prioritizing capital among manufacturing, pipeline acceleration, separation work, potential external opportunities?
Sure. Capital allocation always goes to our internal growth first. We think that we are getting the best return out of focus on internal growth, and you can see that through our pipeline, right? Really investing in our portfolio is the first place we are going. So whether it is for the engineering to develop it or for the capital to develop, for Fit for example, for the CapEx that we need to develop the products and to put them out in the market. That is the first. The second thing that we are spending the capital on is separation. We definitely have focus over the next two years to make sure that we stand up the business with the IT systems and other pieces, and capital will go there.
The third element will be, we have always looked opportunistically at if there are small technology items that could really add to our intensive insulin portfolio. There are always things, whether it is software related hardware that could add to our journey because we are not done with our portfolio right now. So the third element where capital allocation goes.
Maybe sort of stepping back 30,000 foot view, to both of you, what would you say is the most underappreciated part of the story?
I think you mentioned one, which is just our OUS presence. We have been in those markets for a very long time. We believe the growth is durable. The pipeline is coming, so we feel very excited by it. I think in some of our conversations, that is just not as well understood in those markets. The markets are complex, but the good news is we know how to operate in them. I think that is one. What would you say?
I would reinforce the whole fact of our footprint across the world and the ability to generate operating leverage. We talked about it and we explained it quite a bit, but the business really has the infrastructure that we need to really profit upon the growth that we are getting in a very strong way. That is one thing that we continue to explain, that we feel very confident. We have delivered it for the last three years, and we will continue to deliver it in the future.
I think a lot of the maybe wait and see mode or the skepticism is really dying down from certainly when we did the IPO, we showed them the roadmap, like it is happening right now. I think as we are putting runs on the board and we are showing up, pushing the pipeline to the left, I think it is changing minds in terms of what people may have perceived six months ago, even.
Great. Any questions in the audience?
I'd be interested in what your one-month retention rate is in your Type 2 patients, as a KPI. Maybe you can follow that on is, if we were to track or maybe your next layer of KPIs, obviously we can see sales and margins with cash flow coming through. What are the things operationally that we should be or you are focused on? Is it customer satisfaction? Is it more clinical measure? Give me a sense of maybe the KPIs that we should be looking out for.
We haven't published any KPIs in regards, but internally, just practically speaking, it's a bit like if you were to buy a new car. You need to make sure you can run it and drive it and so forth. It's no different than if you're going to go on pump therapy. It's new. If you're used to using injections or you just got diagnosed with diabetes, there's a lot to learn. That's why we have a clinical team that works very hard to make sure those patients are successful, get education around the therapy. They know how to use it. It's working for them. If they hit any roadblocks, we help them troubleshoot. That's really the first 30 days is all about that.
Generally, when people get through that and they're successful, they'll stay on therapy. It's different for some people, it's very super simple, it's easy, and for others, they need more help.
From another KPI standpoint, I think what we try to do is we publish two operational KPIs, new pumps sold and CGM attachment rate. We think that those are the most indicative to the health of the growth of the company because every time we sell a new pump to a customer, we think that's going to really show the top-line growth we're getting. As we talked about the compounding effect of the CGM attachment rate is why we give those two metrics, because that really will talk to the health of the continued growth of the company.
Sure. I guess I am kind of interested in the causal factors which are driving those two metrics, which we can see, and you report out tracking that. I guess, I do not need the precise numbers, but just a sense that they are all flashing green at the moment, or to the extent that some will be a bit yellow, and that you are aware of it, and actually you think there is no reason that these all will not be green for the next 12- 24 months. Therefore, we are going to see all those other metrics go well because the story sounds really good, right?
The execution piece, there is some w e have got to see it happening. I guess I wanted a sense of if those leading indicators, the things which means that those things will drive or flashing kind of green, that will give us more confidence that it is happening.
Well, one of the things I think you could look at is our pipeline acceleration, right? What drives CGM attach rate is getting more patients on the new products that are on AID. When you think of Flex and you think in the future of Fit, the success of those programs are going to drive more AID adoption, which are going to help our CGM attach rate, right? They are going to help our NPS. Really the strength of our pipeline and the execution of it is going to help both those metrics. That is kind of the predecessor to whether or not if we are not successful in those launches, the execution, NPS will not continue to grow, and our CGM attach rate will not continue to grow either.
One of the reasons why, I'm not trying to dodge the question at all, I think one of the reasons why attrition is very hard to be precise is that you don't know if people are retreated. We look at a bunch of things. Did they log in? Did they upload their CareLink? Did they order supply? Sometimes they don't order supply because they forget. I'm often behind on my medications. It's just things like that. It doesn't mean they are treated, they just forgot.
Sure.
The action there is when we take an early signal, we then engage with the patient. "Hey, did you forget to order? Why don't you put this on auto reorder?" for example. That's kind of a bit of the nitty-gritty of how we manage to see through that. But it's hard to report a pure attrition number for that reason, because they may have plenty of supplies in their cupboard, and they don't feel like they need to order it. They'll work down the supplies. We had a lot of patients when we released the new CGMs, they had a lot of Guardian 4 in their cupboard.
They're like, "Okay, I don't want to spend money on the new stuff yet. I'll burn down my stock, and then I'll get the new thing." They didn't churn, but even if we didn't see them order that quarter. That's why it's hard to be accurate about attrition metrics.
Maybe if we have time, I'll maybe ask a kind of KPI question on completely the other side. One of the theories of spins obviously is that you get to control your own destiny. Your capital allocation is better. You can spend it on where you want. You're more focused. All of these great things that we see in spins. If they get that right, they can work. One of the causal things, though, is also having the right people and people feeling committed to the spin versus old co versus other things that they can do. I'd be interested in how is potentially your recruitment and retention, particularly maybe, say, what it is, regretted losses.
Are you keeping the ones that you want to keep? Are you being able to exit out the ones who you don't think are part of the mission, and that organizational resilience piece? What is the employee turnover in terms of presumably if you've got good employees, you're going to be able to execute on all these other metrics, then you have happy customers, and happy customers buy more.
Yep.
I don't know if you can give me a sense of that.
Absolutely. I think first of all, I've been with the business since 2022.
Sure.
Going on five years, and we have been through a lot of difficulty. We had a warning letter in the U.S. We recovered, we turned the business around. The team has been battle tested and it has been through a lot.
You are still together.
We are still together. The point is, it is a wartime team. That is one. The other thing you said is oftentimes in a spin, you have the turnover of people. I think in our case, we have a pretty intact team, through the last number of years as we have turned the business around, really driven our pipeline and growth. That is intact. We do not have a brand new management team. Yes, there are new players like Chad, who has been here over a year, but we have a lot of people who have been with the business. That is number one. Number two is because we are on our own as a standalone company, we are able to be more precise around our incentive structures, that are more direct to performance.
When you are in a big company, you can have all the KPIs you want, but at the end of the day, it is diluted because the company is so big. That is actually more direct. People can see it, and our philosophy is absolutely distribution of pay for performance. If you perform really well, you can do incredibly well. If you do not, you get a different message. That is in place. Our regrettable attrition is very low. We are keeping the top talent. The other thing I would say is we are a California-based company. I think we have more flexibility now to actually have much more competitive compensation for the market environment we are in, and we are able to attract the talent we want, especially with equity in our company, that people really believe in the mission.
I think it is all actually very positive being standalone and part of the rationale why the separation from Medtronic has happened.
Great. Que, Chad. Thank you very much.
Thank you.