Welcome to day two of the 45th annual Raymond James Institutional Investors Conference. My name is Jayson Bedford. I cover the medtech sector here, and it's really our privilege to have with us the management team from Insulet. They've been loyal participants of this conference for many years, not all 45, but for a lot of years, and we certainly appreciate it. We have the company's EVP of Chief Product and Commercial Experience Officer (it's a mouthful), Eric Benjamin, and we also have Deb Gordon, SVP of Investor Relations. So with that, Eric, I'll pass it off to you.
Perfect, Jayson. Thank you for the introduction. It's a pleasure to be here again at Raymond James. Insulet, we just completed our eighth consecutive year of top-line revenue growth above 20% and guided to our ninth consecutive year of top-line revenue above 20% on a normalized basis, in addition to more than 200 basis points of operating margin expansion. So we are incredibly excited about where we are as a business and where we're going from here. At Insulet, our mission is to improve the lives of people with diabetes, and we do that principally through the Omnipod platform, which you see pictured on Kim Soo's right shoulder here. Omnipod is a precision, wearable drug delivery device that simplifies the delivery of insulin to improve the lives of people with diabetes. Kim Soo describes the freedom that she feels from diabetes when she uses Omnipod.
In this presentation, I'm going to make some forward-looking statements and reference some non-GAAP financial measures. So at Insulet, as I just described, we are coming from a position of strength and looking forward to accelerate from here, and we are driving continued growth and success as a leader in the diabetes technology market. I'm going to describe about how we're achieving our mission with market-leading innovation, talk about the strong fundamentals that are powering our financial results, describe how we're penetrating and leading the large, under-penetrated, underserved markets in which we operate, and how we're doing all this by realizing the Omnipod 5 opportunity. We deliver our mission with market-leading innovation. As I described, our goal at Insulet is to simplify the lives for people with diabetes. Diabetes is an incredibly burdensome disease for which people typically make about 300 decisions about their care every day.
The Omnipod platform, that wearable drug delivery device, dramatically reduces the burden of that disease, both by eliminating the need for injections and now, with Omnipod 5, by automating the delivery of insulin to deliver better glycemic outcomes, protecting from high and low blood glucose. We've been in business over 20 years and have built strong competitive advantages over that time. We have skilled talent with deep expertise in everything from human factors design to clinical studies to manufacturing excellence and commercial go-to-market. We have a robust innovation roadmap to build out the Omnipod platform to continue to simplify life and penetrate the under-penetrated diabetes technology markets, and we've invested in scalable operations with manufacturing expertise to make tens of millions of high-precision, safety-critical devices every year. With the launch of Omnipod 5, we've also established advanced data infrastructure.
With Omnipod 5, we get data back every five minutes from each of our users, which helps us learn and innovate more quickly to better serve the market. It also helps us simplify care for people who live with diabetes and the HCPs who provide it to them. Taken together, we deliver market-leading technology, which gives rise to the market-leading revenue growth I described at the beginning, and we serve large, under-penetrated markets that position us for long-term value creation. Looking back more than just one year in 2023, over the last five years, we have grown revenue at a compound annual rate of 25%. Through that time, we have also continued to invest in the innovation that will fuel our long-term growth in our under-penetrated markets, growing R&D spend by 18% per year over that same five years.
While we're doing that, we are also committed to long-term margin expansion, as I mentioned, guiding to more than 200 basis points of operating margin expansion in 2024, and over the last 5 years, we've expanded operating margin by more than 7 points. All of these results are powered in large part by Omnipod 5, which was the most prescribed automated insulin delivery system in the U.S. in 2023 and led us to lead the market in new customer adoption. Stepping back, we are well-positioned for the massive opportunity that is the global epidemic of diabetes. In 2022, there were more than 500 million people worldwide who lived with diabetes, estimated to grow to more than 1.3 billion by 2050. Of those, more than 60 million require insulin worldwide. Of that 60 million, we operate in just 24 markets today.
In those 24 markets, there are about 11 million people who have insulin-intensive diabetes across both type 1 and type 2 diabetes. So these are folks who need both background insulin and insulin multiple times a day with every meal. Of that 11 million in the markets that we serve, just under half live with type 1 diabetes, and just over half live with advanced, insulin-intensive type 2 diabetes. In addition to this 11 million, there are about 3 million people in the U.S. who need some insulin, background or basal insulin, to survive. Putting it all together, our market opportunity in the 24 markets that we serve today is about 11 million people who live with insulin-intensive diabetes and an additional 3 million people who require basal insulin and live with type 2 diabetes.
These markets are dramatically under-penetrated, and Omnipod is extremely well-suited to drive penetration in these under-penetrated markets. Today, of that global opportunity of about 11 million people, something around 5% of people benefit from technology today. So when we say these are large, under-penetrated markets, this is why. There are 11 million people with insulin-intensive diabetes around the globe, approximately 5% penetrated by technology today. The other 95% of people with insulin-intensive diabetes in the markets that we serve today are receiving insulin from multiple daily injections. This means, among those 300 decisions that they're making every day, they are giving themselves injections of insulin, deciding how much to dose, and often seeing blood sugars be too high or too low.
Omnipod replaces, on average, about 14 injections in addition to the clinical benefits that it delivers, which is part of what has made it such a transformative offer in the market. As you see from Jimena, Omnipod's been a game-changer for her. No more multiple daily injections has allowed her to be a child again. So Omnipod 5 has now positioned us to win on all dimensions. In this under-penetrated market, the Omnipod platform, the wearable, has no needles or tubes, is discreet, fully disposable, and offers unique pay-as-you-go economics that are affordable and preferred by both customers and payers, easily accessed through the pharmacy channel in the U.S. That platform is now combined with Omnipod 5 with a cutting-edge algorithm that automates insulin dosing.
Omnipod connects to a partner's continuous glucose monitor today, the Dexcom G7 and Abbott FreeStyle Libre sensors, connects to those partner sensors, takes the signal, and automatically computes the insulin that's required for the user and doses it. That gives rise to industry-leading time in range, the most widely used clinical measure in diabetes technology, very few hypoglycemic events, which are the most significant acute clinical events, and it's approved down to age two. This has made Omnipod 5 the obvious choice in insulin delivery technology and has positioned us to lead the U.S. market in new starts in 2023, taking majority share. As we look ahead, Omnipod 5 really simplifies diabetes management. It delivers strong outcomes thanks to the algorithm that is in Omnipod 5.
It offers a world-class, simple user experience that makes it easy to onboard customers and easy for HCPs to support them, and it's always connected, which gives us data that lets us innovate more quickly for customers and simplifies the care conversations between customers and the HCPs that care for them. As we look ahead, we are continuing to invest to drive penetration in this underserved market. We have near-term catalysts. We are in limited market release to integrate Omnipod 5 with Dexcom's G7, and we'll be bringing that to market this year. We've announced that we will be launching our integration with Omnipod 5 with FreeStyle Libre 2 Plus in the U.K. and the Netherlands in the first half of 2024, and we've begun work to integrate Abbott's FreeStyle Libre 3 with Omnipod 5 as well.
We are also bringing to market the iOS app that will enable users to fully control the Omnipod 5 system from their iOS mobile phone, which is a beautiful product that includes some nice upgrades for customers. In addition to these near-term technology opportunities, we're also investing to expand our global presence. As I mentioned, we're just in 24 markets around the world today, and we're constantly entering new markets around the world. We're investing in clinical evidence such as the remote, excuse me, the randomized controlled study comparing Omnipod 5 to traditional insulin delivery technology that will be published this week at ATTD, and we're constantly investing in the customer experience to sustain our industry-leading retention of approximately 90%. Putting this all together, we see innovation driving horizons of growth as we penetrate and lead in the under-penetrated diabetes technology market.
In the first horizon, we're really focused on the type 1 diabetes market, particularly in the US and outside the US. In the US, the type 1 diabetes market is only about 40% penetrated, and that is the most penetrated of any of our markets. In the US, we are continuing to drive Omnipod 5 growth, and we're delivering the sensor integrations and the iOS mobile app in the near term to accelerate growth in the US. Outside the US, insulin delivery technology is even less penetrated. Still on that first horizon, we are bringing Omnipod 5 to more international markets, and that'll help us rise penetration from where it is today, somewhere between 20%-25% over time. In the second wave of innovation, we are delivering new technology that helps us expand TAM. In particular, I mentioned the type 2 diabetes market.
We have two things happening in the near term that are going to help us bring Omnipod to people who live with t ype 2 diabetes. We have a product called Omnipod GO that helps us get after the 3 million people who need basal insulin, and we are wrapping up the pivotal study in type 2 diabetes for Omnipod 5 to expand the indication for Omnipod 5 into type 2 diabetes. We'll be filing that indication to expand the label for Omnipod 5 in 2024 to bring to market the entire Omnipod portfolio for type 2 diabetes in 2025. In that second wave, we're also investing in geographic expansion to bring the power of Omnipod to more markets around the world beyond the 24 that we serve today, and we're using the data that we uniquely get from Omnipod 5 to develop data products for customers and providers.
As we look beyond those first two horizons of growth, insulin is where we are because we've been a disruptor, and so we are continuously investing in next-generation technology, in particular algorithm technology that'll further reduce burden and improve outcomes for people around the world, next-generation hardware, and AI and machine learning-based products. So we are thrilled to have concluded our eighth consecutive year of above 20% revenue growth and extraordinary 2023. As we look ahead, the future is even brighter. We are achieving our mission to improve the lives of people with diabetes with market-leading technology like Omnipod 5. We have strong fundamentals, including guiding to more than 200 basis points of operating margin expansion and 20% revenue growth on a normalized basis in 2024.
We are investing in the technology improvements and commercial investments that will help us continue penetrating and leading in the large, underserved market that is diabetes. We're doing all this because of the strength and leadership that Omnipod 5 has afforded us. Thank you.
Thanks, Eric. Well done. Let's just hit the waves here. So I guess just to start, and it's a very basic question but an important one, type 1 penetration in the U.S. is about 40%. By our math, it probably increased about 200-300 basis points year-over-year. CGM penetration is anywhere from 60%-70%. Pumps are at 40. Guidelines suggest that pretty much everyone with type 1 diabetes should use an AID system. So again, why isn't that number today higher than 40%?
Great question, Jayson. As we look at the market, we see the number getting from 40% approaching 70% in the medium term. A big part about why the market isn't there yet is that technology like Omnipod 5 is relatively new to market. The folks who have not yet chosen to adopt technology have chosen to continue using multiple daily injections because they judge that that is easier than the technology that they would be choosing. Until Omnipod 5, until a fully disposable, fully wearable, easily accessed through the pharmacy channel, affordable product that delivers great clinical outcomes was available, a lot of folks were making the choice not to adopt technology. Today, we see the same thing that you described, which is the market is accelerating and growing thanks to innovations like Omnipod 5.
Can we assume that every new Podder is already using a CGM?
The vast majority of our new podders are using CGM. That's true.
Then just thinking about the incremental new users added here in 2023, by our math, at least in type 1, you were gaining over 60% of the new users. Is that a sustainable number?
Jayson, we saw terrific leadership in the U.S. in 2023. As I mentioned, we were the market leader as the most prescribed automated insulin delivery system and the leader in U.S. new customer starts in 2023. Market data that we've seen suggests we were winning between 60% and 70% of those who are adopting technology for the first time in 2023. When we look ahead, we plan to continue leading in the market. When we look at what the market has told us through that leadership experience in 2023, it's that fully disposable, fully wearable, pod-based AID that delivers great clinical outcomes and is affordable through a pay-as-you-go commercial channel is what the market wants. When we look competitively, we don't see anything approaching Omnipod 5 coming. We are planning for continued leadership.
In terms of expansion, you've got iOS. You've got additional sensor integration. Which of those two have the bigger impact here in 2024?
In 2024, the most important catalysts for us are the sensor integrations. What we've learned by being in the market with one terrific sensor partner so far and very close to entering the market with our second terrific sensor partner is that it is really powerful to be in market sending one aligned message to people with diabetes and HCPs about the power of automated insulin delivery. In the last eight months, what we've seen is some friction in the marketplace as we've been going to market with Omnipod 5 integrated with G6 and our important partner promoting their latest innovation. Just a quick anecdote, I was at an Omnipod 5 training in the third quarter in the Midwest last year, and at the training, somebody showed up wearing a sensor that was not compatible with Omnipod 5.
We've sold straight through that and delivered market-leading results through the second half of 2023, but it does cause commercial friction for us to then have to go engage with that patient and their HCP to get a script for G6 and move somebody onto G6 who may already be on another sensor. So the catalyst that is the most important to our 2024 growth is sensor integrations. That commercial alignment is really powerful in the market. In the long run, iOS is a big part of what's going to help draw folks who are not yet opting into technology to choose technology. So it's a long-term growth driver but less of a near-term catalyst.
Just on G7 integration, which I'm going to assume is the bigger of the two in terms of sensor integration, you're in limited market release today. What do you need to see, or what unlocks that where you go to full market release?
The primary milestone that we look at as we're planning for a full market release is we're just measuring the customer experience. There's a lot with any new innovation that comes to market to learn about how customers get onto the product. We're testing that as we always do. We're making terrific progress with the limited market release, and as soon as we have the data that we need, we'll do the pod build for the channel and bring it to full market release.
You just mentioned your leadership and your expected leadership going forward. You do have competitors who are introducing new products. You covered quite a bit of it. Can you just reinforce the competitive dynamics as newer products come to market? Why is Omnipod still positioned to lead here in the face of, again, additional competition?
Yeah. Jayson, so when we look at the market, what we see is that customers really prefer the pod-based form factor. So we've got lots of ways that we get this data, but when customers are offered both a legacy tube form factor or a pod form factor, customers choose the pod form factor in super majority type quantities. That's been borne out in research and in the marketplace at this point. And add to that the fact that Omnipod 5 delivers leading clinical outcomes, best-in-class time and range, really low hypoglycemia, and it is the easiest to use. It is a winning-on-all-fronts offering, as we described in the presentation. We certainly do see competitors launching innovation. What we don't see is anything in competitor pipelines that is coming close to all of the strengths that are Omnipod 5.
GLP-1s, has the discussion with your physician customer base changed as GLP-1s get more widely adopted?
What we experience in the market is a lot of co-prescription of GLP-1s and Omnipod for folks who live with type 2 diabetes. Our type 2 new customer starts have accelerated since the launch of Omnipod 5, including in the last nine months as GLP-1s have been discussed more in the investment community. The reality is GLP-1s have been widely used in the diabetes community for about 17 years, and they're well understood to be part of the treatment progression. The HCPs that we work with know that. We're having very successful conversations with HCPs about bringing the benefits of Omnipod to folks who live with insulin-intensive type 2 diabetes.
Just still thinking of the wave one international, you had a release out this morning on the RCT data that will be presented later this week. What does that do for the business? Just again, for context, the way I understand it is you're in a couple of countries with Omnipod 5 in Europe. Does this accelerate the launch? Does this support reimbursement? Just what's the relevance and importance of the data?
Yeah. So we are presenting this week at ATTD results from our first randomized control study comparing Omnipod 5 to pump technology that is not automated insulin delivery. And that data will be used primarily to support reimbursement, to assure that we get the value that Omnipod 5 deserves in international markets. It will also include some additional patient-reported outcome data that will be used competitively and will help strengthen our position in the market. As we step back, international growth, we guided to 10% growth in 2024. And that's really a tale of markets that have Omnipod 5 already and markets that don't yet have Omnipod 5. We launched in the U.K. in June of last year and in Germany in Q3 of last year, and we're seeing the same rapid success in those markets that we saw when we launched Omnipod 5 in the U.S.
We are bringing Omnipod 5 to the majority of our customers outside the U.S. by the end of 2024. And because of our recurring revenue model, as we continue to launch Omnipod 5 in more markets, we'll see growth accelerate through 2024 and then beyond into 2025.
Just the definition of value means higher pricing, or the goal of higher pricing, is that a fair assumption?
That's a fair assumption.
Okay. Okay. type 2, it's been quite strong. Pump penetration is sub 5%. You have data coming up from your pivotal, I believe, at ADA this year. What's the reimbursement path for AID in type 2?
The reimbursement path for Omnipod 5 in type 2 is very favorable. We actually have access today for Omnipod 5 in type 2. We don't have regulatory clearance, so we cannot promote, and we do not promote or engage with our HCP partners to sell Omnipod 5. But when physicians choose to write Omnipod 5 off-label, users are covered. And that's because the coverage that we've gotten for Omnipod 5 does not distinguish type 1 versus type 2. It's for all folks who have insulin-intensive diabetes. As we think about sort of next steps there, Jason, we are wrapping up our pivotal study for the type 2 indication now. We'll be packaging up that data.
ADA will be a tight timeline in order to get that data out, but we plan to get that data out this year, and we'll be filing it with FDA this year in order to bring it to market in 2025.
I didn't mean to prematurely suggest ADA. I thought that was what was communicated. We estimate there's probably about 55-60 thousand people with type 2 diabetes using a pod today. Are all those folks getting reimbursement, or is there any cash pay there?
We don't break out our user base by type 1, type 2, but we do have tens of thousands of customers who live with type 2 diabetes. To the best of our understanding, they are reimbursed. DASH and Omnipod 5 both have very strong reimbursement.
There was a bit of a mention of Omnipod GO, which addresses a big opportunity there. You're still early on, but what are the next steps in terms of either a more fulsome launch, potential reimbursement, and what's that doing for your business?
Great question. So Omnipod GO is our technology that delivers basal insulin for folks who are early in their type 2 progression. That product was cleared in 2023, and we've been in commercial pilot in 2024. What we're learning through that pilot is that Omnipod GO resonates with primary care physicians, and importantly, the entire Omnipod portfolio resonates with primary care physicians. So we structured the pilot to call on folks who are not writing any Omnipod product and see whether Omnipod GO resonated with those customers. That's worked. What has been pleasantly surprising to us is that very quickly in those conversations, the primary care physicians have engaged with us to ask, "Well, what about solutions to folks with more intensive insulin needs?
“Do you have solutions there?” And so our learning from that is that the entire Omnipod portfolio has a place in selling into primary care and for the treatment of type 2 diabetes, and our plan is to bring that whole portfolio to the type 2 market in 2025 with the Omnipod 5 indication.
It sounds like there's been a halo effect here on your type 2 business from GO.
The way I would characterize it is we've seen a halo on our type 2 business from a combination of having GO in the market and from having Omnipod 5 in the market.
I guess maybe just last one in time. Margins, I thought, were very impressive in the fourth quarter. You can kind of work through the numbers, but you still generated, even if you back out kind of the pull forward, anywhere from mid- to high-teens operating margins. The guide is 13% for next year. I'm guessing you can do better if you wanted to, but what are the big investments that are kind of weighing down margins?
We are constantly balancing what we invest for future growth versus what we drop through. We're a recurring revenue business that serves really large under-penetrated markets for which commercial investment and technology development are the key ways to unlock those markets. So we have a long list of investments that we're contemplating, whether that's entering new geographies that we don't serve today or whether that's new technologies. And we just weigh those constantly as to how much are we going to drop through versus how much are we going to invest. In 2024, we're making continued large investments in evidence as we build out as we complete the Omnipod 5 type 2 study, complete the RADIANT study, which is the first automated insulin delivery study using Abbott's FreeStyle Libre 2 sensor.
We're also doing next-generation clinical studies this year, and we're making large commercial investments both in the U.S. as we prepare the U.S. for the launch of Omnipod 5, make the most of our near-term catalysts, and as we continue to grow internationally.
All right. Eric, that's great. We've bumped up against our time. The breakout is in Amarante 2 downstairs. Thank you.
Thank you.