All right, thanks a lot. If you want to move on. I'm Robbie Marcus, the Medtech analyst at JP Morgan. Very happy to introduce CEO of Insulet, Jim Hollingshead, our next speaker. Jim will do a presentation followed by some Q&A. Jim?
Great.
Thank you, Robbie. Good afternoon, everybody. Thank you for coming today. I want to start my presentation with Chloe here. Chloe is a delightful 11-year-old young lady who we had the opportunity to meet when we rang the closing bell at Nasdaq in November. She's a competitive gymnast, and she also lives with Type 1 diabetes. And like most people with Type 1 diabetes, Chloe needs insulin every day to stay alive. And prior to Omnipod 5, which you can see her wearing there on her arm, she needed to inject herself multiple times every day to manage her diabetes. And Omnipod 5 has changed her life. And she and her mom told us when we met them, it's been just a revolution for them. And it allows her to get her insulin dosed. So Omnipod 5, automated insulin delivery for people that might be new to our company.
What Omnipod 5 does for her is it takes all of the calculation and all of the burden out of automated injections, and it doses her insulin and keeps her blood glucose in range all day long, 7 by 24. It allows her to compete as a gymnast. It allows her to live a very simple everyday life. It allows her to sleep through the night. It gives her mom peace of mind all day long in sleeping through the night. They say it's been a revolution, and it's people like Chloe that we get out of bed every day to help. Our mission is to simplify life for people living with diabetes, and so I'm delighted to have a chance to tell you a little bit about Insulet today and really grateful that you came to spend some time with us.
I know you see these caveat slides all day long. I'm going to make some forward-looking statements. There are some limitations to forward-looking statements. I'm also going to use some non-GAAP measures. There are some limitations to that. I encourage you all to look at our SEC filings if you want to see that. And that's all on our website. The other thing I just want to remind everybody is that I'm working off of our Q3 call. We're not doing intra-quarter updates. We're not doing any update to guidance. So I'm working off of Q3 numbers as well, just as a reminder. Two things I want to accomplish. I want to give you an overview of Insulet, just briefly who we are, what we do, what's our financial profile.
And then I want to spend some time talking about our plan to capture the really immense market opportunity that we have in front of us. So just starting with why we do what we do. Our mission at Insulet is to improve the lives of people who live with diabetes so that they can live very simple lives of freedom, removing the burden of having to manage their disease, make all the calculations you have to make if you need insulin, remove injections from your life so that you can just rely on the pod to get your insulin. Omnipod 5 is a revolutionary technology that we brought to market, and that's allowed us to accomplish great things over the last several years. We are the global leader now in our space. We're the global leader in using technology to manage diabetes.
Just to give you a sense, we've guided to $2 billion in revenue for 2024. That's the guide we gave in our Q3 call. We have more than 400,000 people using an Omnipod product around the world. We have more than 250,000 people using our flagship product, Omnipod 5. We're in more than 25--actually, not more than--we're in 25 markets internationally. Those numbers on customer base were from last year. We update that customer base every year on our Q4 call. We'll be updating those customer base numbers on our February 20th call. You can see we're very widely adopted, and we've been growing the business. Right now, as we stand today as the market leader, we are the number one AID system in new customer starts in the U.S. market.
We're the number one most prescribed automated insulin delivery system in the U.S., and we're the number one insulin pump for new users where we compete across Europe and internationally, so very clear market leadership. That leadership has been established on the back of our flagship product, Omnipod 5. Omnipod 5 is a revolutionary product. It's the first tubeless, waterproof, wearable automated insulin delivery system in the U.S. We are the market leader in Type 1, which has been our core market historically. We've just received clearance in August for Type 2. We are the first to market in AID with a Type 2 indication. It's a very important opportunity for us and for all those millions of patients living with Type 2 diabetes who need insulin. Excuse me one sec. Thank you. I can clear my throat a little bit there. World-class algorithm built into the pod.
The pod runs autonomously. It doesn't need to be connected to the phone or the controller to continue to deliver your insulin. We deliver fantastic time in range and fantastic real-world outcomes for our patients with our algorithm. We provide sensor of choice, and so Omnipod 5 connects to a continuous glucose monitor. We're integrated with the Dexcom G6, the Dexcom G7, and the Libre 2 Plus, so we provide a wide choice of sensors for our patients, and we have both Android and iOS operating system. Our core controller, which you see in the photo here, is something that's provided in a startup kit. That's a locked-down Android cell phone. You can use an Android app that you can download from the Android App Store. We've just launched a very requested feature, our iOS app for the iPhone, just in Q4 to rave reviews.
And so we provide a choice of how you manage your diabetes through your phone as well. Just to double-click a little bit on Type 2, we're very excited to get this indication for use. On the left here, you can see a graph that shows the headline results from our pivotal trial, which is called SECURE-T2D. Patients in our study who came in, these are patients that had uncontrolled A1Cs, enjoyed a benefit of 0.8% reduction in their A1C. But that's just the headline result. The results from SECURE-T2D were phenomenal across the board. The higher the baseline A1C, the better the results and improved control. That was the same for patients using a GLP-1 and not using a GLP-1, which is a really important finding. Same identical benefit, increasing clinical outcome benefit across baseline A1C results. No increase in hypoglycemia.
Very racially and demographically diverse study, one of the most racially and demographically diverse studies ever done in insulin in Type 2, and our patient profile in the study very much like, very deliberately like the patients as they present in clinic, so the results are really reflective of what we see out in the real world. On the basis of these headline results and other results in the study, we received approval from the FDA in near record time. We filed in June with our study. We received approval in August. We got the approval in 67 days for our label expansion. We were pleasantly surprised by that. We had to actually scramble to make sure our reps were ready to launch at clearance. We launched into Type 2 with Omnipod 5 officially on label, and we had all of September. We had a nice lift.
We see a big market opportunity, which I'll talk about in a minute. We will continue to commercialize Type 2 and Type 1. We're the market leader in both already. We're expanding our sales force in the United States to reach more patients and more prescribers. Evidence is how we'll lead. The evidence is very, very strong for Omnipod 5 and Type 2. We also have a very unique opportunity to leverage our direct-to-consumer promotional activities. More than half of the leads that we have gotten historically out of our DTC efforts have been Type 2 patients. We've, in the past, had to steer them to Omnipod DASH, our previous generation of product, which is not an automated dosing product because we weren't yet on label with Omnipod 5.
Now that we can unshackle ourselves and steer those patients to Omnipod 5, we think that our Omnipod 5 product lends itself really well to media promotion. But also, we can capture more efficiency in our spend because we capture so many initial leads for Type 2 patients, and we can now route them onto product. So we're very bullish about this as first-to-market, big opportunity. We have multiple moats that we've built around our business. And just very briefly, first and foremost, we're the only patch pump AID system. The patch pump form factor is a huge moat for us. It's proven very difficult to replicate. It took us years to get to the ability to build a patch pump product at scale, with quality, with high yields, and with safety. You'll hear many of our competitors talk about their patch pump program.
We are years ahead of anybody else. And it's proven very, very hard to follow us into patch pump. Our IP is very well protected. Our trade secrets are very well protected on this. And we think we have a very substantial lead. The form factor of the product has also allowed us to deliver the next moat here, which is widespread affordable access. Omnipod 5 delivers pay-as-you-go economics. So there's no durable component to the product. There's no capital outlay. You're not buying a durable pump. And if you're a payer laying out $4,000 or $5,000, or if you're a user laying out a $1,000 copay to get on the therapy. Variable economics, you can often start on Omnipod 5 as a free trial. Most of our patients in the U.S. pay less than $50 in copay.
Many of our patients have $0 copay through the pay-as-you-go economics and the U.S. pharmacy channel. We're the only AID pump, in fact, the only insulin pump in the diabetes space with Part D reimbursement, which means we're reimbursed through the pharmacy benefit. Internationally, that pay-as-you-go business model is also of great appeal to international payers who also don't want to take the risk of a durable pump on a customer. They'd rather see the patient use the pump so that they can pay as the patient uses. The patient stops using their therapy, they don't have to pay for it anymore. This is a significant advantage for us and a huge benefit to our users and to payers worldwide. Related to that, we have optimized manufacturing. We produce tens of millions of patch pumps a year at scale, at volume, with high quality.
It took us, round numbers, more than $1 billion of investment to get to the scale that we have right now, very difficult for competitors to follow, and then finally, an emerging moat around our business is the use of data. Every Omnipod 5 customer is connected to the cloud. Their usage of the product is captured passively. The patient doesn't have to upload or enter anything, any data. The doc doesn't have to upload or enter any data. So we have all this usage data, and we will increasingly use that to improve our algorithms, to improve the customer experience, and to improve the product experience overall, which will drive product preference. The more data we get, the better our product will get. We're already incorporating that into our patient flow, into our customer care, and we'll incorporate it into other avenues of the business going forward.
And because we have such a lead in volume and such a lead in customer base, that's also a moat that continues to grow as we roll out Omnipod 5. All of that has allowed us to produce a really strong financial profile. So you can see here, this is based on our guide to $2 billion in 2024. If we reach that guide in 2024, we will have delivered a 23% CAGR on revenue over the last five years, 390 basis point growth from 2019 to 2024 in gross margin. And really importantly, and I steer you to the operating income number here, we continue to get leverage out of the business. And we're committed to delivering increasing operating income as we scale the business overall. I'll point out, not on the chart, we're also delivering significant free cash flow.
And all of those things allow us to continue to reinvest in our business so that we can continue to extend our lead, deliver on growth, deliver on innovation for patients, and deliver for shareholders. So that's Insulet at a glance. Let me just give a couple of highlights about how we intend to pursue our very large market opportunity. First, what's the size of our market? You can see on these bars, this shows the by therapy type, the total available market, total addressable market for U.S. Type 1, international Type 1, then Type 2. So on the left there, you can see about 1.7 million people in the U.S. living with Type 1 diabetes. That market is only about 40% penetrated with pump technology. We are the player who's been growing that market.
The remaining players in the gray part of that bar are still using multiple daily injections. We're bringing people off of the fence, off of MDI, onto technology because of the ease of use and the ease of access of Omnipod 5. There's still significant runway in the U.S. Type 1 market where we are already the leader, and we plan to extend our lead. Internationally, about 3.5 million people live with Type 1, and in the international markets we serve, only about 20% penetration. So a larger denominator, lower penetration, significant opportunity. Omnipod 5 has been very successful in our international markets. Our label expansion is the next two bars, so if you move to the right on this chart, you have 2.5 million people who live with Type 2 diabetes in the U.S. who are using multiple daily injections, so they need insulin. They need intensive insulin.
The way they care for themselves looks a lot like a Type 1 patient. That market is only 5% penetrated. And most of that 5% is us with our Omnipod DASH product and a bit of off-label use of Omnipod 5. That is lots of runway in Type 2 where we're first to market with the label. And then one slot to the right there, you have basal-only insulin users in the U.S. We have three million there. Most people would say three to four million people living with Type 2 who need insulin, but they're usually taking a once-a-day dose of basal insulin, completely unpenetrated. Our label expansion covers those two bars. So about 5.5 million people living with Type 2 in the U.S. who require insulin, big growth opportunity for us. And then finally, international Type 2. Type 2 diabetes is a global epidemic.
Everywhere the Western diet goes, Type 2 diabetes follows. There's market development to be had there in the U.S. Type 2, the use of our product for Type 2 is reimbursed. We will go and drive reimbursement and access in the Type 2 space internationally. That's a midterm, long-term growth opportunity for us. But you can see in total, 14 million people in our TAM and just barely getting started. Tremendous growth opportunity for us. We have a very clear strategy to achieve the growth and to penetrate those markets. First, we will continue to advance on our market-leading product offering, Omnipod 5, by extending the platform. Second, we will continue to lead in Type 1, lead in Type 2 in the U.S., and extend those leads and drive the growth of the Type 2 market.
Third, we'll drive increasing access for Omnipod 5 in our international markets by rolling out to all of our existing countries. I could talk a lot off of this slide. You'll probably be glad to hear I'm not going to try to cover this slide. I'll simply make the observation that when we launched Omnipod 5 in August of 2022, you can see on the left of this chart, we were launching with what was, in effect, our minimum viable product, our Omnipod 5, our patch pump platform, form factor, a single sensor with the Dexcom G6 just in the U.S. with an Android-based software platform and phone control, and we still have a fantastic algorithm delivering great clinical results. We had our pivotal trial when we launched in the U.S., and we were indicated for Type 1 patients age six up. Today, we've continued to expand the platform.
We now have three sensors, as I said before, the Dexcom G6 and Dexcom G7, the FreeStyle Libre 2 Plus. We're internationally available in multiple markets, and I'll talk a bit about that in a minute. We've launched our iOS platform to rave reviews. We continue to have a fantastic algorithm, and we have increasing evidence off of that algorithm, so we have hundreds of thousands of patients on the platform. We get data off of every patient. We've been able to establish across all demographics and age groups fantastic time in range in clinical outcomes with very low hypoglycemia for our patients, really fantastic results. We will continue to build that evidence, and of course, with SECURE-T2D, we've secured the label extension to cover Type 2 patients who need insulin in the U.S.
We're now indicated and have for several months been indicated down to age two and Type 1, and we have all adults in the U.S. who live with Type 2 who need insulin in our label. We will continue to build on this platform. We'll add sensor integrations. We'll add apps. We'll add features to our apps. We'll build a seamless cloud-based customer experience, and we'll continue to advance our world-class algorithm. We already have two additional revolutionary algorithm programs underway. This is the leading product in the market. It leads in Type 1. It's first to market in Type 2 with the product that outran everybody else in Type 1. We have a right to win in Type 2, and we will continue to outrun our competitors. As I said before, we're going to extend our lead in Type 1, and you can see in our U.S.
market back in 2019, we had $420 million in revenue. We guide to about $1.5 billion in revenue this year, so we have a very significant CAGR in the U.S. market because of our Type 1 leadership. We're first to market with Type 2. We'll use SECURE-T2D data to drive that market. We'll build our customer base, and that will help us grow because we have a recurring revenue model. Tied to no durable equipment upfront, we have recurring revenue on the pod. So our revenue builds. When we get a new customer start, our revenue builds on the basis of recurring revenue. It gives us a very substantial gearing effect on the business. So customer growth for us is terrific for future growth as well. We will continue to invest as we become a more sophisticated grown-up company.
We will continue to invest in our commercial models and our commercial excellence where we've made great strides this year. And we are building a world-class seamless cloud-based customer experience, which will help us to drive retention on a recurring revenue platform. We'll drive access internationally. In 2023, we launched in the U.K. and Germany. Had terrific growth in both markets. Well, this year in 2024 that I'm speaking to now, but it was back in June. So actually, we're now in 2025, right? But speaking to our Q3 call, we launched in France and the Netherlands. We just announced on Monday that we've launched in five new markets internationally. We just announced that we've launched in Italy and the four Nordic countries here, Denmark, Finland, Norway, and Sweden. And by the end of 2025, we'll be in five more of our international markets listed here on the bottom.
Those represent substantial growth opportunities because Omnipod 5 wins everywhere it goes. Last year, we had to increase our guidance on international growth twice because Omnipod 5 has such great appeal and drives such great new customer start growth that it outgrows our expectations when we launch it. And you think we'd learn our lesson. And so we're trying to get better at that. But we're delighted to see so many patients who are waiting for Omnipod 5 who can be served by our fantastic revolutionary product. So that's it. We're very well positioned to deliver sustained and profitable growth off of our product platform.
As we continue to expand our innovation, drive our markets, Type 1 and Type 2 in the U.S., and drive access internationally, we generate very strong margins, very strong operating income, and free cash flow that gives a lot of flexibility to our capital structure and our balance sheet. We're delighted to be able to talk to you about the company. I'll look forward to Robbie's questions. I just want to close. I opened with Chloe. I want to close with Millie. Here's Millie. She's wearing her Omnipod 5 there on her right arm. Prior to Omnipod 5, Millie had been injecting herself with insulin multiple times a day for 31 years. She went on to Omnipod 5. She couldn't believe how simple it was. She has improved time in range, dramatically improved A1Cs. She sleeps better through the night.
And she's told us that Omnipod 5 is remarkable. This is why we get out of bed every day at Insulet to help people like Millie. We're so excited at the impact we have on real lives all over the world with more than 400,000 patients on our platform. We will continue to drive that because we want to meet the needs of all of these patients, these millions of patients who are waiting for our help. Thank you very much.
A lot to talk about. Maybe we could start with Type 2. And in 2024, you got FDA approval for indication expansion into Type 2 insulin users, insulin-intensive users. The product's approved. It's on the market. You actually had a pretty good growing but small installed base prior to approval from off-label usage in the pharmacy. What's the early experience like since the approval?
And part two of the question, what is Insulet doing to generate awareness both from the patient and the prescriber communities?
Yeah, great questions. Just to clarify, Rob, but this mic's working better than the platform mic, by the way. So just to clarify, the label's actually expansive. It's not just for MDI users. It's for all insulin-using people with Type 2, right? We have been historically a leader in Type 2 because Omnipod DASH had an indication for use with Type 2 patients. And so we had a really vibrant business in Type 2. We started to see consistent off-label use for Omnipod 5, as you'll recall, even though we weren't promoting. And so over the last several quarters, our Type 2 mix in terms of new customer starts has been in the sort of 20- 25 range.
In Q3, we just crossed just a little bit over 25% of our new customer starts. In the quarter, we're 25%. And we have so many physicians that already have experience with Omnipod 5 in our existing call point that when we launched at the end of August, the month of September, we had a really nice lift on Type 2 prescriptions. And so we're very bullish on that trend. What we're doing to drive the market is several things. But primarily, I would say we're expanding the sales force. And so when you think about our existing historic call point, you think about the physician market as a pyramid. Top of the pyramid for us is the endocrinology practices. And then the next layer down is people tend to think of them as primary care physicians.
You can see from their scripting behavior that they write a lot of rapid-acting insulin, and they write a lot of CGM prescriptions. What we're doing is expanding our sales force to reach down into those practices where we know there are people treating diabetes. They're kind of almost diabetologists. They tend to be family practitioners or internists, but they do a lot of diabetes care. We'll reach down into that part of the market where there are a lot of Type 2 patients, both intensive insulin therapy patients and basal-only patients. There's a lot of Type 1 down there too. Having that expansive label allows us to reach down that way. We're in the process of expanding right now. The other thing that we do is we do a lot of DTC, as we call it.
So we do a lot of social media and outreach. Every once in a while, you might see an Omnipod commercial on TV. We did some this time last year on the NFL playoffs, right? But Omnipod 5 lends itself really well to awareness through ads because it's so simple and it's so appealing to people. And so I think, as I said, half of our leads historically have been Type 2 patients that we've steered to DASH, Omnipod DASH. Now we can steer them and capture them on Omnipod 5. So we'll drive that model. We'll drive the direct sales model. We'll drive the media DTC model, drive awareness. And we're really bullish on being able to increase adoption.
Obviously, 5% of the addressable market is a very low penetration rate today. How much room is there to go with your existing sales force calling on endocrinologists?
And at what point and what percentage of the market is covered by non-endocrinologists or primary care? And is there a need to expand the sales force in the near to medium term?
Yeah. So we're in the process of expanding right now. I think if you just look at Type 2 in our current call point and just at the intensive insulin users in Type 2, our current call point covers about 30% of the. So the more acute the Type 2 patient, the more likely they are to be seen by an endo, right? So about a third of those patients are in the endo channel. Our expansion is going to get us down on that MDI patient to another 10%-15%. So say north of 40% of those patients we'll be calling on.
But then there's more basal insulin patients down in that next layer down as well. And our label covers that. So a lot of this for us is educating the physicians using the fantastic clinical results that we have with SECURE-T2D. And then we'll flex accordingly. So there is a market development effort here as physicians get comfortable with the idea of insulin pumps. Omnipod 5 is so easy to use. We saw it in the trial with our own investigators. They were delighted at the ease of use of Omnipod 5. So we're bullish on it. But there is market development to happen. There's low-hanging fruit, quote unquote, in our current call point. As we expand, there's a little more education, but we think we'll see good results.
Talk about pharmacy access and the importance in this Type 2 population.
I know a lot of your competitors are working on Type 2 labels, but they go through the DME channel. So maybe spend a minute on DME versus pharmacy and your advantage here with pharmacy access.
Yeah. We have multiple advantages in pharmacy access, starting with the form factor of the product. So Omnipod 5 lends itself really well to the pharmacy business model. You get your Omnipods in a box where you pick up your insulin. There's no extra training for Omnipod 5. In fact, training is easier. Onboarding is easier for an Omnipod 5 product. So that's first. The form factor fits the business model. We also are the only pump that's Part D reimbursed. So we have the reimbursement through the pharmacy, which is a formal thing that's very important. We have long-standing relationships, and we've built up our relationships and our understanding of the channel.
We've been in the pharmacy channel since 2017. So that's a big advantage for us. And interestingly, Omnipod 5, because it's Part D reimbursed, there's no distinction or reimbursement between Type 1 and Type 2. So nobody writes a script that says Omnipod 5 for Type 2. They write a script that says Omnipod 5. So we're launching already with coverage. And that's a big advantage for us. Our competitors are still selling durable product. We'll see what they're able to do. I think the product doesn't fit the channel very well. They don't have Part D reimbursement, and they don't have the track record we do. We learned a couple of lessons the hard way as we entered pharmacy and were through that cycle. And so we think our competitors will continue to innovate on multiple levels. We know that. We're conscious of and respectful of our competitors.
But we think we have a pretty sustainable advantage in pharmacy.
Maybe we could talk about Europe. The parallel is you were fighting with one or both hands tied behind your back with DASH. It was a good product. You just didn't have the type of solution that patients were really starting to get accustomed to with the hybrid closed loop. You now have Omnipod 5, and that's been a huge success in Europe. I think on the third quarter call, you said you were now the new patient leader in the markets you're in. And you had a great slide up with all the new markets you're going. So where are you in the launch? And then also compare the European market to the U.S. market. And can we see this explosive growth in Europe that we saw in the U.S.?
Where we are in the launch is we've now launched those five countries. We already have patients on product in all five of those countries, which is exciting. The U.K. and Germany both exceeded our expectations at launch in terms of adoption. France is out of the gate very strong. The Netherlands is a bit of a smaller market population-wise, but out of the gate very strong. So adoption has been really good in those markets we've launched. Omnipod 5, it's a catchphrase we use, but Omnipod 5 is consistently one everywhere we've taken it. Just on the basis of those country launches, we became the market leader across our international markets where we compete. Just on the basis of those four launches, 25% of our new customer starts through our customer base. The quarter was on Omnipod 5.
So you can see the traction Omnipod 5 gets, which is why we're so bullish on continuing to roll it out. I think, and what was the second part of your question? I'm sorry.
I guess really I'll ask it a different way. U.S. and the pharmacy, there's really no four-year warranty period. So I was leaving that. Getting back to that, thank you. Yes.
So in the U.S., when we launched, because we're in the pharmacy benefit and not in the DME benefit, patients can switch over very easily. And so you might be on a tubed pump in a DME benefit, reimbursement benefit, but you could switch to Omnipod 5 through the pharmacy without worrying about your four-year contract. That doesn't exist in our international markets.
So if you're already on a pump in basically all of our international markets, you're locked into some period of time in a contract before you can switch product. And so to your question about explosive growth, when we launched Omnipod 5 in the U.S., we saw much more competitive switching than we'd anticipated because of the ease of crossing that benefit boundary. In Europe, what we anticipate is it will be mostly new customer starts or people coming off of MDI onto Omnipod 5. And we know there's significant pent-up demand for that. Just a couple of things to remember there. The first one is those markets are only 15%-20% penetrated, depending on the market. So there's a lot of customers out there who are using multiple daily injections who have yet to come onto technology. Those contracts do roll over.
The other thing that was interesting for us, especially in the U.K. when we launched, is if you're, let's say you're on Omnipod DASH, it's the same thing. You're on a four-year contract with your Omnipod DASH pump. In the U.K., we found that hospital systems found a way to switch people to Omnipod 5 because they treated it as an insulin contract and not a DASH contract. That wasn't true of every hospital. It was hospital by hospital. But we did see more upgrade off of DASH than we anticipated. I think we'll see that in other markets. But really, the target for us is new customer starts, bringing people off of the burden of daily injections on Omnipod 5. And we've consistently delivered really good growth with that internationally.
Remind us what Omnipod 5 percentage of new patient mixes in the U.S.?
and what you're seeing in some of these a little further along markets in Europe.
Yeah. And Omnipod 5 is the vast majority of our starts now in the U.S. And it's more than 90% of our starts in the U.S. And especially with the advent of the label, I think we'll see that continue to shift because DASH was being used predominantly for Type 2 patients, right? In Europe, you do see a big move to Omnipod 5. DASH is the incumbent product. So where we launch Omnipod 5, we see a rapid mix shift. We don't see the upgrades, but we see a rapid mix shift because we drive new customer starts. And we'll expect to see that too. But DASH will persist in the international markets for some time because of the installed base.
You're integrated now with Libre, whether it's Libre 2 or Libre 3 in different markets. Do you think that opens up big channels of patients? And how should we think about the impact of that integration?
Yeah. Again, just to be clear, we're not yet integrated with Libre 3, so we're working on that integration with our partner, Abbott, and working diligently to get that to market. We are integrated with Libre 2, so the Libre 2 Plus, their Plus moniker, for those who don't know, is the way they mark the sensor that's compatible with AID systems, so Libre 2 Plus is what we're integrated with. We launched that integration first in Europe because Libre 2 is the most widely adopted sensor in the European theaters. Very, very large installed base of Libre 2 patients in those markets, and we've just brought that to the U.S.
They also have, obviously, I mean, they have more than five million. I forget their number. They probably announced the number this week. But they have more than five million patients on the Libre platform overall. So there's a big pond for us to fish in. We do think it represents a big opportunity. The other split you see in the sensor market is Libre sensors tend to be more on Type 2 patients, and Dexcom sensors tend to tilt more towards Type 1 patients. So when you combine the Libre 2 integration with our Type 2 label, we think that also builds a big opportunity for us to fish in that installed base.
Maybe we could spend a minute on just the competitive moat around your patch pump.
Over the past, even just two, three years, we've seen every single diabetes pump manufacturer announce a patch pump platform development if it wasn't already there for multiple years. I know your organization has spent probably over $1 billion investing in the patch pump technology and manufacturing. Went through some growing pains a decade ago. And here you are as a market leader. So maybe talk about some of the difficulties and the competitive moat that you've built on your patch pump platform.
Yeah. It has proven to be very, very difficult for anybody to follow us in the manufacturing scale of patch pumps. And as you say, Robbie, predating me and predating our current management team, Insulet went through some rocky years trying to figure that all out. We've spent at least $1 billion getting there.
And so if you think about what's in the pump, there's 72 parts designed for manufacture. One of our operations leads says it's like a Swiss watch that you fill with insulin used for three days and then throw away. I mean, it's a very sophisticated device, very difficult to engineer. There are things in the pump that are really important that create benefits. Just for example, if you're using a tubed pump, you have to bleed insulin. You have to bleed air bubbles out of the pump. So you prime it. You put insulin in the cartridge, then you prime the tube. You have to bleed air bubbles out of the tube, all this stuff. You're losing insulin when you do that. And you've got to worry about an air bubble. All of that's taken away with Omnipod 5. It's hermetically sealed.
We have engineered in a proprietary way the way to, in effect, there's no air bubble bleeding because it's designed out of the product. The cannula deploys automatically. It's right there, and so there's things like that, the auto deployment and so on, so there's a lot of trade secret in the design. And just the manufacturing scale, to have the very, very high yields we have on the manufacturing line to produce tens of millions of pods, it's a big hurdle to get to anything like that for somebody trying to follow.
Yeah. I've seen it, and it's pretty amazing to watch all the robots do it. Maybe we can move down the P&L, and as impressive as the top line has been, the bottom line has been, if not more impressive.
And I forget the exact number, 300-something basis points of operating margin expansion this year, I think it was. Maybe talk about the ability to continue to expand margins going forward. As long as your top line is growing, where are you going to see the most leverage down the P&L? And how should we think about the magnitude of growth moving forward?
Yeah. It's a great question. We're focused on growth because we want to serve as many patients as we can. And we will use the money we generate to reinvest in the business. We want to continue to fund our innovation. And we want to continue to fund sales and marketing. So we have a really strong track record of top-line growth. And as you think about that, we get scale out of the business because the dollar growth is big.
So we guided 2024 to a 69% gross margin. And one of the things we've said and tried to be very clear about is during the 2023, 2024 period, we had a tailwind on gross margin that came not just from manufacturing improvements, but also from the shift out of DME into U.S. pharmacy. So we have better margins in pharmacy than in DME, which is different from some CGM players. It's the opposite. So we had a tailwind on gross margin with pricing accrual as we shifted on Omnipod DASH. We haven't given a guide for 2025. And I'm not going to give a guide now and just say that we are committed to improving gross margin on a consistent basis over time. We'll see a little bit less tailwind in that because of that pricing conversion and because international prices are lower just structurally.
That's true across all med tech, so as international grows, the mix will change, but we'll use operating efficiencies and improvements in manufacturing to drive gross margin. It will go to the bottom line because we scale the business, so we will continue to spend on R&D to drive our innovation, but as the dollar growth in the business gets bigger, we'll spend on R&D, but we'll have more cash to drop to the bottom line and reinvest in other things and also deliver to shareholders, so we've said consistently that our aspiration on operating income is to deliver at least 100 basis points of growth year-over-year. I'm not doing any guide for 2025 right now. We'll do that on our February 20th call, but we're bullish on our ability to continue to drive growth because we have the best product already, and we're driving innovation.
And then as we grow dollar-wise, we'll be able to both fund our business and our growth and also deliver more to the bottom line for shareholders.
Free cash flow, you're now generating a pretty substantial amount. What's the priority uses for it?
Well, it gives us a lot of flexibility. And by the way, one of the things that I think our finance team has done a great job at is we now have really strong credit ratings as well. So we can go to the "normal" lending markets for our balance sheet. So we do have a convert that comes due in 2026. We don't want the convert to convert. So you'll see us in 2025 figuring out what we're going to do about that. And then cash we'll use to drive innovation and sales as we grow the business.
Not making any announcements, but we'll be very judicious in how we use that. We'll improve our capital structure, improve our debt structure, fund the business, and at some period of time, we might see us use that in a different way with shareholders.
M&A hasn't been something you've really done in the past. Are you looking at options for M&A? Or is it primarily an internal investment?
Well, we're always watching what's going on. I mean, I think the hurdle for us on M&A would be very, very high because the intrinsic attractiveness of our business is very, very high, and so we scan the market. We scan what's going on in technology developments, and you might see us opportunistically acquire something that built the business. We're not looking at transformative M&A. We don't need it. We're growing so fast. We're the market leader.
We're in great position right now with our growth, and so I would say it would be opportunistic. We'd be focused on building the diabetes business. If I had to guess, maybe something more software than hardware is more attractive to you? I don't want to make any announcements, but yeah, maybe,
well, maybe on that, we're out of time. Jim, thanks for a great discussion. Thanks, everybody, for attending.
Robbie, thank you very much.