Hello, everyone. I'm Robbie Marcus, the MedTech analyst at JPMorgan. Very happy to host our next session with Insulet. CEO Ashley McEvoy will do a presentation followed by some Q&A.
Thank you, Robbie.
Thank you, Robbie. Good morning, everyone. It's a pleasure to be here. I am Ashley McEvoy, President and CEO of Insulet, and really looking forward to sharing our story and why we are so energized about the present and, importantly, the future. Before we begin, please note our Safe Harbor statement available on our website, which includes important information about risks and uncertainties. So at Insulet, our vision is simple and powerful, and that is to create a world where diabetes demands less every day, everywhere. Our mission is born of empathy, driven by ingenuity, proven by science, and reflects what drives all of us at Insulet, which is really to transform the lives of people with diabetes every day. Let me take a bit of a moment to just introduce you to Eric. Eric was not surprised by his type 2 diabetes diagnosis at 27, given his family history.
And while a CGM helped reduce his A1C to 7.5%, he still struggled with time in range. After starting Omnipod 5 in early 2025, his A1C dropped to 6.5%, and his time in range raised to 90%, which he calls a real game changer. Today, Eric leads an active life, playing competitive softball, even pickleball, and running, and credits Omnipod 5 for giving him the control that enables his lifestyle. In that, Eric gets to just say yes to what matters most. For 25 years, Insulet has been finding a better way, a journey that has taken us from the disruptor to the market leader in automated insulin delivery. I'm going to refer to automated insulin delivery for brevity to the AID category.
Our breakthrough in AID system, Omnipod 5, launched just over three years ago, and it quickly has become the most requested solution among people with diabetes and the most prescribed solution among clinicians. The strength of the Omnipod platform has allowed us to become the clear leader in new customer starts in both the U.S. and Europe, and based on our prior guidance, is expected to result in revenues of approximately $2.7 billion for 2025 and a customer- base of over 600,000 Podders across 25 markets. Insulet is well positioned to deliver sustained top-tier growth and industry leadership. Our strength lies in several unique structural advantages that have been built over 25 years, providing durable competitive moats. First is a unique form factor coupled with a highly differentiated technology platform and a highly scaled manufacturing infrastructure.
Second is clinically proven science and outcomes that help strengthen the ADA guidelines both for patients who have Type 1 as well as people with Type 2 diabetes. Third is strong differentiated brand loyalty, the most requested brand and one of the highest Net Promoter Scores in the category. We enjoy preferred access and affordability, and we are an innovative performance-based culture driven by an experienced leadership team. We showcased this in our November Investor Day. Our moats provide a strong foundation for sustained market leadership and long-term value creation for stakeholders. Let's just start with what we've accomplished in recent years. We are not just the market leader in automated insulin delivery. We are the market driver. Over the past five years, we have driven 66% of global market growth. We've achieved a 26% CAGR, more than three times the rate of any other company.
We lead in new customer starts, and our share has grown from less than 30% in 2020 to 50%. This proven track record gives us the confidence and fuels our ambition for the future. Our journey from disruptor to leader has positioned Insulet with unmatched financial strength, market-leading growth, expanding profitability, and accelerating cash flow, all supported by a very healthy balance sheet. Revenue has compounded at a 25% CAGR since 2021, driven by robust customer starts, durable retention across both the United States, our largest market, as well as international markets. Our adjusted operating margins have expanded nearly 600 basis points, and adjusted EPS has grown significantly faster than revenue. We became cash flow positive in 2023 and have delivered accelerating free cash flow ever since, providing us the flexibility to invest in continued growth and innovation.
This proven track record underscores our ability to deliver sustained performance and value creation for shareholders. Now, we're not just seeking to lessen the burden of diabetes. Many people are in this hunt, but we offer a uniquely compelling investment proposition in this market. First, we have a large under-penetrated TAM across the U.S. type 1 community, U.S. type 2 community, and international markets with significant runway to unlock additional growth in one of the fastest growing segments in Med Tech. Second, as I just mentioned, we have durable competitive moats, a unique form factor coupled with a highly differentiated technology platform and a highly scaled manufacturing infrastructure. As I mentioned, very strong brand loyalty, clinically proven technologies, preferred access and affordability, and an experienced leadership team and performance purpose-driven culture.
Third, we have a market-leading pipeline designed to advance the standard of care with multiple new product launches over the next three years. Fourth, Insulet is strongly positioned to successfully execute our strategic plan focused on penetrating our three core markets: U.S. type 1, OUS type 1, and U.S. type 2 through market development and demand generation. We operate from a position of unrivaled strength with a healthy balance sheet supported by strong, steady cash flow generation, which gives us the financial flexibility and resilience that enables us to fuel innovation and continue to support top-tier growth. The combination of all of these factors is the why we are in a class by ourselves. So let's talk about the TAM.
In the United States, people with Type 1 diabetes represent more than a $9 billion market, and AID penetration is just 40%, lagging well behind CGM penetration of around 70%, so around a 30-point differential. In OUS, Type 1 diabetes represents more than a $10 billion market, and only one out of four people with diabetes is on AID therapy, with CGM representing around 65% penetration, so around a 40-point delta. And in the United States, with Type 2 diabetes, it represents around a $12 billion market, and AID has less than 5% penetration, where CGM penetration is trending around 55%, so around a 50-point differential. Together, this makes our total addressable market more than $30 billion, representing approximately 8 million people with diabetes in these three core segments.
Our ambition is to serve even more people with diabetes, which more than doubles our total addressable market from eight million to 17 million people with diabetes. Now, starting with our OUS markets, we will build off of our strong Type 1 infrastructure, equity, and success as we expand into Type 2 diabetes. In the U.S., we'll take our learnings and capabilities and apply them to the Type 2 basal-only community, which will allow us to reach another three million people with diabetes. Last, in targeted Asian markets, together there are around two million people living with Type 1 diabetes. Importantly, this does not even include the Type 2 community living with diabetes in these markets. Headline, this is a large under-penetrated TAM, and why AID has been one of med tech's fastest-growing segments. This TAM gives us confidence in continued market attractiveness.
So our leadership position wasn't earned overnight. It's the result of decades of focused investment built around competitive moats, which are quite difficult to replicate. First is our technology and our manufacturing moat. Over the last 25 years, we've invested more than $3 billion in R&D and manufacturing, delivering Omnipod, the first tubeless wearable solution offering unmatched freedom, ease of use, and robust clinical outcomes. It remains the only scaled tubeless wearable AID solution in the market. Our highly automated global manufacturing and supply infrastructure enables us to consistently produce high-quality devices at scale with a cost advantage. We produce tens of millions of pods every year. Second, we enjoy access and affordability as a competitive moat. We pioneered this pharmacy pay-as-you-go model, which reduces the friction for prescribers and users and broadens access and support adherence. We'll continue to innovate that business model. Third is our brand loyalty moat.
We've built deep connections with our podders, creating an engaged community that advocates for Omnipod and strengthens our brand. This loyalty drives industry-leading satisfaction and retention rates and has been validated by numerous external recognitions from people with diabetes as well as healthcare providers, including the number one most requested and most prescribed AID in the United States. We enjoy the highest Net Promoter Score in our category. We have the highest consumer awareness among multiple daily injections users, and 70% of people with diabetes who request a brand ask for Omnipod. Collectively, these moats give us high confidence in the durability of our top-tier growth, sustained market leadership, and strong returns on investment. Diabetes remains a complex and burdensome condition. Despite insulin therapy, most individuals fail to achieve ADA-recommended A1C targets, and diabetes-related distress is widespread. Furthermore, 90% of people using insulin are not benefiting from AID.
Despite guidelines recommendations, this leaves a significant gap in care as well as outcomes. We are focused on delivering innovation that lessens the pressing burden of diabetes for patients, improves outcomes, and simplifies the process of prescribing and accessing Omnipod, enabling us to bring these benefits to the millions of people taking insulin. In 2026, we will deliver several of the most requested updates to Omnipod 5 to strengthen our number one position. These include automation improvements, full CGM integration, and simplified data and insights. In 2027, we will launch Omnipod 6, which will dramatically reduce the burden of managing diabetes with improved connectivity, real-time updates to customers, and more personalized automation designed to enhance clinical outcomes. In 2028, we will launch our fully closed loop system, our fully closed loop system for people with type 2 diabetes that eliminates manual inputs and simplifies therapy for millions.
Aligned with ADA guidelines and addressing the unmet needs of 5.5 million people with diabetes on insulin, where only 25% are achieving recommended glucose targets. Beyond our three-year period, we are looking at bringing fully closed loop to type 1. We're looking at our next generation platforms as well as addressing other areas with big unmet needs into the category. Now I'm going to touch on each of these innovations. This year, we'll be delivering several of the most requested updates to strengthen our position as the most loved prescribed AID system in the U.S. First, an enhanced algorithm designed to deliver better glycemic control and reduce device interactions to simplify daily use and improve algorithm responsiveness to prolonged hyperglycemia to prevent the highs.
Second is integration with FreeStyle Libre Plus, a leading sensor that provides patient choice and simplifies conversations with healthcare providers when starting patients on Omnipod 5, and third, Omnipod Discover. It's a new data platform for streamlined insights to provide succinct healthcare professional review of Omnipod data, designed to make it easier to prescribe and optimize care. Discover uses machine learning to provide insights and reassurance directly to users and gives them greater confidence. It also streamlines onboarding, simplifying the process of starting on Omnipod. These advancements will strengthen our leadership position as the number one customer-preferred, most prescribed AID system, bringing in new users from the MDI therapy category and expanding the AID category and expanding our market share. In 2027, we will launch Omnipod 6, a product designed to improve outcomes, offer seamless connectivity, provide a platform for accelerating continued innovation, and streamlining prescribing Omnipod for healthcare professionals.
It will have a smarter algorithm to personalize insulin delivery designed to improve outcomes. We will have our pivotal study, which is now complete, and we will be sharing data at the ADA in June of this year. It will also have enhanced connectivity designed to improve the wear experience through greater location flexibility. This has been a key ask from many of our podders. And it will have an updatable single pod that can be updated over the air and works across all CGM systems. So let me give a little bit of context here. This will allow us to go from two SKUs to one master SKU, and it will be compatible with all sensors, eliminating the need for us to manufacture sensor-specific SKUs. It will also help accelerate our integrations with the latest generation sensors on their way.
This simplifies the prescribing behavior for clinicians as well as patients. This is a big deal because it strengthens our innovation capabilities and improves our cost to serve. And in 2028, I'm pleased to share we will be launching our fully closed loop system for people with Type 2 diabetes. It's designed to make AID accessible to virtually everyone, addressing a significant unmet need for the 5.5 million people on insulin. Today, only 25% of these patients achieve recommended glucose targets, and 70% of these people are cared for in primary care who are lower prescribers of AID therapy. Our fully closed loop system is designed to change exactly that.
It's an AID system designed to allow primary care physicians to offer AID to their patients on insulin, consistent with the updated ADA guidelines that now recommend AID as the preferred option for adults with insulin-requiring type 2 diabetes. It will have intelligent real-time automation, no meal announcements, carb counting, or manual input. You just put it on, connect to your CGM, and live. It will simplify prescribing and management. Eliminating all inputs dramatically reduces the complexity for clinicians, making Omnipod as easy to prescribe and manage as CGM, even for primary care providers. It will simplify onboarding for people with diabetes starting as simple as picking up a prescription or a sample kit and enjoying the benefits of automated insulin from home on their own schedule. It will enable a consistent commercial advantage.
This simplicity improves our user experience and significantly lowers the commercial investment required to drive adoption. It helps us to continue to expand access, designed to improve clinical outcomes and unlock access for the millions who have never considered AID therapy. It also serves as a key catalyzer of growth in our strategic plan. While our initial focus is the type 2 basal bolus market, the primary care-ready simplicity of fully closed loop enables us to target the broader type 2 basal market over time. Our fully closed loop for type 2 represents a game-changing opportunity to improve outcomes for millions, expand our reach, accelerate our growth in one of the largest and most under-penetrated segments of diabetes care. We expect to start the pivotal this year, submit our regulatory filing in 2027, and launch in 2028, so innovation is clearly one aspect of our growth strategy.
Over the next three years, we're evolving how we go to market to drive increased category penetration and expand market share. Starting with the type 1 in the U.S., today around 40% of people with type 1 use automated insulin delivery. By 2028, we aim to drive penetration above 50% through three commercial levers. One, leveraging demand generation for AID to raise awareness and drive advocacy for clinical practice to reflect updated clinical guidelines and bring more people from MDI therapy into the category, driving market growth and clearly earning more than our fair share of market share. The second is around strengthening commercial execution and excellence through improved execution, broadening reach, improving frequency, improving prescriber engagement, and optimizing channel strategies. And last, it's about creating a superior user experience, making starting and staying on Omnipod as easy and affordable as possible.
In type 2, where we were the first to secure this indication in the U.S., we have an enormous opportunity to leverage our strong foundation in type 1 built over 25 years and create the type 2 AID market with a goal to more than double penetration by 2028. Our approach is tailored to the unique clinical context, patient journey, and prescriber base in the type 2 community, and we will achieve this through three commercial levers. The first is positioning Omnipod as the standard of care for patients with type 1 diabetes, type 2 diabetes, generating incipient interest among endocrinologists and primary care providers through direct-to-consumer engagement and patient demand, driving adoption and awareness of the updated ADA guidelines so they translate into clinical practice.
The new ADA 2026 Standards of Care now recommend AID as the preferred insulin delivery system for all individuals with Type 1, for all people with Type 2 diabetes on multiple daily injections, and they now advise AID for people with Type 2 on basal insulin who are not meeting glycemic controls. Additionally, and importantly, they have removed previous initiation and maintenance requirements, improving access and flexibility for patients and clinicians. The second lever is creating a differentiated Type 2 user experience, building confidence and supporting patients in starting and staying on Omnipod through tailored onboarding and education. And the third lever is removing barriers to adoption, demonstrating Omnipod's robust clinical and economic value to continue to improve access and reimbursement. Another strategic growth driver at Insulet is globalization. In the markets where we operate, OUS, there are approximately four million people living with Type 1 diabetes.
About 80% are in Europe and 20% across Canada, Australia, and the Middle East. Category penetration in these markets is only around 25%, where CGM penetration is around 65%, so around a 40-point differential, despite engaged payers and clinicians, mature healthcare systems, and significant unmet need. Our primary focus is to drive market growth through market development and win share through demand generation powered by our proven playbook. By executing on these initiatives, we aim to get to 30%-35% penetration by 2028. A key step change to achieving this goal is bringing Omnipod 5 to more markets. Today, Omnipod 5 is present in 14 markets, and we're expanding our reach to six additional markets in 2026, predominantly within the Middle East and then with Spain.
Over the longer term, we're beginning to develop the global type 2 market to bring the benefits of Omnipod to another 4 million people with diabetes. Our success unlocking this opportunity in the U.S. and early conversations with key opinion leaders in major European markets gives us the confidence in our ability to unlock this large under-penetrated TAM over time. We have a proven track record of profitable international growth, and we look forward to capitalizing on our experience and our competitive advantages. All of these investments, strategies, and execution come together in our financial growth algorithm, which we shared at our investor day in November. Through 2028, we forecast revenue will grow at a category of approximately 20%, driven by increased penetration in our core markets. We expect adjusted operating margin expansion of approximately 100 basis points per year as leverage and efficiency build throughout the P&L.
Finally, we are forecasting adjusted EPS to grow faster than revenue at a 25% + CAGR, supported by continued strong free cash flow generation. We are leading today and reinvesting meaningfully to extend that lead. Innovation remains at the core of our success. We plan to invest more than $1 billion in R&D over the next three years, fueling breakthrough technologies and expanding our platform. We are strengthening our competitive moats through sharper commercial execution and access strategies that lower friction, accelerate starts, reduce service costs, and deepen customer loyalty. We are widening the gap operationally by expanding capacity in Acton, Massachusetts, Malaysia, and Costa Rica, and advancing automation to increase resiliency, reduce unit costs, and reinforce our manufacturing cost and quality advantage. The outcome we invest to pull further ahead and sustain our top-tier growth while continuing to deliver margin expansion.
To close, let me begin, let me end with where I started, and that is that we are finding a better way for 25 years, and we will continue to find a better way. That journey has taken us from a disruptor to now the market leader. In our existing markets, we see large under-penetrated $30 billion TAM, and we have line of sight to even more. Today, we operate from a position of strength with deep moats across technology, science, manufacturing, access, and brand. This enables us to help even more people with diabetes worldwide and capture this remarkable opportunity. Our robust innovation pipeline will allow us to address the biggest unmet needs in the category and the barriers to prescribing and help drive AID adoption in our existing markets and unlock new market opportunities.
Backed by our strong financial position, discipline, execution, we are investing in sustaining top-tier growth and enhancing profitability. Importantly, this enables us to serve many more patients like Eric. Thank you for your time and your interest today. All right, I'll invite Robbie to come join me and my leadership team, Flavia Pease, my CFO, and Eric Benjamin, our COO. Welcome.
Do you want to sit on the uncertain or do you want to sit here?
Well, good. Maybe we could start with sort of how you feel about Insulet and your position in the market versus competition. You're at an interesting crossroads where you're clearly the market leader in patch pumps. You've been in the pharmacy for many years now, both in commercial and Medicare, where no one else is.
And now everybody seems to be coming with a patch pump, and I guess it's flattering to have everybody want to copy you. But how do you feel about where you sit today and your ability to remain where you sit today versus the competition?
Yeah, thank you, Robbie. Let me first start with, I mean, this is a company that's put up 20% growth for the past 10 years, and we shared in November that we have strong conviction to continue to deliver 20% growth at a 70% margin with 100 basis points of operating margin expansion and a healthy cash flow. And that is really going to enable us, I'd say a couple of key things to stay ahead. Number one, we have a large under-penetrated market, and 90% of people who are using insulin are not using AID therapy.
And so it's no wonder that the market attractiveness is still there. Now, what we enjoy is Omnipod from an innovation point of view is in a class by itself. It's a highly differentiated technology platform. We've invested ahead of the curve. We've invested $3 billion in R&D manufacturing to build a world-class manufacturing footprint with automated advanced automation that enables us to scale with a cost advantage. We're going to continue to innovate and stay ahead of the curve. As now market leader, we enjoy, I'd say, a unique perspective into what are the biggest unmet needs in the marketplace and what are the biggest barriers to prescription and prescribing behavior. We have a market-leading pipeline over the next three years, starting with this year, that addresses each of those unmet needs. So that's about innovation and, again, manufacturing at scale.
What you may not know about is really our commercial moat. So you may know us as a pioneering the pay-as-you-go model. And yes, we enjoy preferred access and affordability and will continue to maintain that. But we've also been investing in our commercial engine and how we expand the prescriber base. And we right now call on 27,000 prescribers because of our highly simplified user-friendly form factor with proven science and a very discreet form factor. We are able to be almost the gateway to the category and attract new prescribers into the category, so much so that our prescriber base was up 25% through quarter three last year. And in attracting new prescribers, we're also going to activate patients to bring them into our category.
And we shared in quarter three by activating the patients to go ask their clinician, "We're getting more than the fair share of Omnipod scripts, and we're getting more prescribers into the category." And then I come to the strength of our balance sheet with recurring revenue model of 20%, 100 basis points of operating margin expansion. We will continue to invest in innovation, in commercial capability, and very thoughtful, deliberate globalization. Robbie, that gives us really optimism to live into the commitment that we shared in November.
So in terms of new patient growth, U.S. and outside the U.S., and great trends, but sort of different positions. In the U.S., you launched Omnipod 5, what is it, two years ago, and you're still actually throughout 2025 accelerated new patient growth on the back of integration with the leading CGMs and iOS.
So one, how should we think about new patient growth going forward in the U.S.? And then let's talk about afterwards outside the U.S. as you were kind of coming from one hand tied behind your back without integration, and Omnipod 5 has had a great launch there and phenomenal growth. So maybe speak to sort of slightly different time points of entry and how you feel about sustainability of new patient growth in each geography.
Yeah, I would start. I think we have a very balanced growth profile. If you look at the data we shared through quarter three, the U.S. is our largest market. We continue to enjoy new customer starts in the U.S. We continue to pursue penetration in type 2. That's enabling performance in the U.S., our largest market, and the high 20% in terms of our revenue performance.
OUS, before we launched Omnipod 5, we were enjoying revenue growth between 10% and 12%. In recent years, with the launch of Omnipod 5, you're now starting to see that revenue category go to the high 30%. We're around 600,000 Podders of a customer base. We have really strong retention rates. We're able to use the data that we get every five minutes from our patients to make sure that we can do our part to keep them on therapy. And so I think we have a healthy balance from a geographic point of view, Robbie. I think we have a healthy balance from an indication of type 1 and type 2. And quite frankly, we're focused on really building the category to get more people from MDI into the category.
And since we have such a differentiated technology, we're going to get more than our fair share of new customer starts.
I want to touch on the third quarter earnings call. You talked about maybe a shift in guidance strategy. And I know we've talked about this, and I'm on the same page as you. I know what you're thinking, but a lot of investors just heard they're not going to beat in 2026 with the new guidance philosophy. We'll have smaller beats and give a little more appropriate guidance. And so that was the investor focus. Maybe I'll just open up to you and clarify what exactly do you mean by the new guidance philosophy and why the shift?
Thanks, Robbie. Yeah, I think what we intend to is to continue to provide guidance with a high degree of confidence of achieving and hopefully beating.
We do want to share guidance that reflects a balanced view of our outlook and contemplates both known upsides and potential downsides at the time that we provide that guidance. So I think it's a continuation of the strength of the business, and we will continue to beat and meet and hopefully beat earnings. There has been some noise in past earnings calls around with the severity and significance of the beats, but perhaps in the past, where there was a lot of questions around the business slowing down as you went throughout the year. And so I think that's one of the things that we want to evolve from and focus investors in really understanding the strength of the business and the confidence that we have.
Got it. Very clear.
Ashley, you mentioned the balance sheet, and I think this is one point I harp on with investors is of the four or so manufacturers of insulin pumps, three of them either lose money or don't make much money, and then Insulet makes a good amount of money with several hundred million of free cash flow per year, probably over the next three, four years. So how can you use that to further put a gap between you and the competition? Patch pumps are very expensive if competition wants to invest here and move into the patch pumps, but what can you do to always stay one step ahead?
Yeah, I'll invite Eric to join me.
I mean, I would say that we've invested $3 billion to get to where we are, and that's enabled us to be a market leader and produce tens of millions of pods at strength. It allows us to invest. We've announced that we're building a plant for, and it allows us to invest to stay ahead of the curve. It enables us to stay ahead from an innovation point of view to really have a pipeline that meets the highest areas of unmet need and reduces the barriers to prescribe, again, to drive category penetration. We know because of our brand loyalty that we will get more than our fair share. I would say looking ahead, Robbie, there might be more entrants into the category, but comparability is not true. I think that Omnipod, even with new entrants, will continue to be a class by itself.
And we've invested 25 years to get to be this disruptor, and we're going to continue to invest very thoughtfully with very strong ROI to make sure that we continue to be the pacesetter of the category. Anything you want to add, Eric, to that?
Maybe just a couple of quick perspectives. You said it well, Ashley, but we've spent 25 years and invested $3 billion to create the differentiated technology platform that is Omnipod. And as a reminder, that's a fifth-generation wearable. And so we've iterated through each of those technologies. Before Omnipod 5, we were on the fourth generation of Omnipod, building highly reliable, auto-inserted, fully disposable, waterproof, wearable insulin therapy.
And then we spent years adding the technology to connect to multiple CGMs to deliver personalized automated insulin delivery and great clinical outcomes and get all of that technology into our fifth-generation wearable insulin delivery system that is Omnipod 5. And so, Robbie, the way we think about it is exactly as you teed it up. Doing that well to create a market-leading technology requires investment. And we've spent $2 billion in cumulative R&D to get here, and we shared at investor day. We're going to spend another $1 billion over the next three years to deliver the market-leading pipeline that Ashley described in her opening remarks. And to that end, as Ashley said a few minutes ago, because of our high gross margins, we're able to invest in that innovation. We're also able to invest to scale our commercial investments so that that becomes an additional moat.
As we keep broadening the prescriber base and introduce them to the market-leading fifth-generation wearable technology, that's the standard that they expect from the industry as we broaden the category. And so as we keep broadening our commercial footprint, setting the expectation in the market for a fifth-generation proven technology of AID, that becomes an additional moat that we can keep investing in over time.
Well, great. We're out of time. Thanks for a great discussion. Thanks, everybody, for joining us.