Insulet Corporation

Good afternoon, ladies and gentlemen, and welcome to the Insulate Corporation Fourth Quarter 2023 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Deborah Gordon, Vice President Investor Relations. Thank you.

Good afternoon, and thank you for joining us for Insulate's Fourth Quarter and Full Year 2023 earnings call. With me today are Jim Hollington, President and Chief Executive Officer, and Lauren Budden, our Interim Chief Financial Officer and Treasurer. Both the replay of this call and the press release discussing our 2023 results and 2024 guidance will be available on the Investor Relations section of our website. Also on our website is our Fourth Quarter Supplemental Earnings Presentation. We encourage you to reference that document for a summary of key metrics and business updates. Before we begin, we remind you that certain statements made by Insulate during the course of this call may be forward-looking and could materially differ from current expectations. Please refer to the cautionary statements in our SEC filings for a detailed explanation of the inherent of such statements. We'll also discuss non-GAAP financial measures with respect to our performance, namely adjusted growth and operating margins, adjusted EBITDA, and constant currency revenue, which is revenue growth excluding the effects of foreign exchange. These measures align with what management uses as supplemental measures in assessing our operating performance, and we believe they are helpful to investors, analysts, and other interested parties as measures of our operating performance from period to period. Additionally, unless otherwise stated, all financial commentary regarding dollar and percentage changes will be on a -over-year reported basis with the exception of revenue growth rates, which will be on a -over-year constant currency basis. With that, I'll turn the call over to Jim.

Thanks Deb. Good afternoon and thank you for joining us. With our strong Q4 2023 results, we capped off another transformational year in which we firmly established Insulet as the market leader in automated insulin delivery. In 2023, we realized 30% revenue growth, which marked our eighth consecutive year of 20-plus percent revenue growth and represented dollar growth of almost $400 million. We accomplished this while also significantly expanding margins and generating positive free cash flow. Our record new customer starts in 2023 fueled our global growth and our Omnipod 5 AID system, which generated $1 billion in revenue in 2023, is transforming diabetes management. We entered 2024 with significant momentum, and we are looking forward to a year of many growth catalysts ahead. On today's call, I want to do three things. First, discuss our financial results and market traction. Next, I'll provide an update on the continuing progress of our clinical efforts and then review key developments in our innovation pipeline. Our fourth quarter revenue once again exceeded our expectations with total Omnipod growth of 35%, including U.S. growth of 43%. Part of our outperformance was driven by U.S. distributors placing additional orders near the end of the quarter, which we had not factored into our guidance. We'll provide more detail on this in a few minutes. Yet even without these additional orders, we closed out 2023 ahead of our expectations, including healthy margin expansion. These are remarkable results, and I want to thank our global team for their execution and dedication. We are proud of the incredible impact the Omnipod product platform is having on people with diabetes. We recently achieved milestones of roughly 425,000 active global customers on the Omnipod platform, which represents growth of approximately 25% from this time last year. This also includes almost 250,000 customers on Omnipod 5, which has proven to be revolutionary. And Omnipod Dash continues to drive strong new customer starts in our U.S. Type 2 diabetes market, as well as in most of our international markets. We are thrilled that our unique technology is making a meaningful impact in the diabetes community, advancing our mission to improve the people with diabetes around the world. Omnipod 5 is the only FDA-cleared, fully disposable, pod-based AID system. This makes our product unique and clearly differentiated from competitors' offers. These product attributes underpin our competitive advantages and are key to fueling our growth, further establishing our leadership position and expertise in the diabetes market. The fully on-body, wearable AID experience of Omnipod 5 dramatically reduces the daily burden of living with diabetes. And its simplicity, ease of use, and broad and affordable access are also key drivers of its rapid adoption. For almost a decade, we have significantly invested in U.S. pharmacy channel access, including building the infrastructure, developing key pharmacy relationships, creating an easy onboarding pathway, and building deep in-house expertise, all of which has resulted in the strong and leading channel access we have today. We continue to strengthen Omnipod's access and affordability, including our innovation pipeline that will go through this channel by building on our advantages. In the U.S., Omnipod 5 continued to represent the vast majority of our new customer starts in Q4, and we expect this trend to continue. In addition, customer retention remains strong. The mix of U.S. new customer starts coming from multiple daily injections and legacy tube pumps continued at an estimated -20% split. Today, even with improved technology, most people using insulin still use MBI as their mode of care. More than 60% of people with type 1 diabetes are using daily injections. Therefore, bringing people out of MBI and onto Omnipod remains the largest opportunity for us, and we continue to drive pump penetration and share gain in both the type 1 and type 2 markets, strengthening our leadership position. Omnipod 5 not only drove our number one position for U.S. new customer starts in 2023, it was the most prescribed AID system in the U.S. This is because a growing number of health care providers are writing scripts for it. In Q4, we saw another increase in prescribers growing to over 18,500, up from 17,000 in Q3. We speak with many HCPs, and it is clear that Omnipod 5 is the winning choice for AID. It is extremely gratifying to see the growing demand, confidence, and adoption which have led to a growing number of scripts, HCPs, now right for our system. Our strong new customer starts included continuing adoption of Omnipod in the U.S. type 2 diabetes market. We estimate that no more than 5% of people with type 2 diabetes who need intensive insulin therapy are currently using any kind of pump, and we know that we are already the market leader in that space. We are confident that Omnipod will prove to be a simple and compelling solution for the millions of people globally with type 2 diabetes who today need insulin therapy as a part of their diabetes care regimen, as well as the future millions who will naturally progress to requiring insulin as a part of their care. We are well positioned to bring all of the benefits of the Omnipod platform to people with type 2 diabetes both today and in the future. In the fourth quarter, type 2 diabetes patients represented between 20 and 25% of our U.S. and customer starts across our Omnipod suite of products. While Omnipod Dash with its type 2 indication for use is the leading insulin pump operating in this market, we look forward to marketing Omnipod 5 to type 2 patients once we have an expanded indication. The underlying demand is apparent. We expect the last participant to complete our type 2 pivotal trial in the coming weeks, and we plan to submit results to the FDA by the end of 2024 for an expanded indication. We are confident this will be another catalyst that will fuel our growth trajectory, allow us to serve more patients, and help us deliver on our mission. We look forward to sharing study results at ADA this June. The success of Omnipod 5, including its early yet powerful impact in two of our European markets, led to another strong quarter of new customer starts globally. Internationally, we realized a notable sequential increase in new customer starts driven by the impact Omnipod 5 is having in the UK and Germany. Our early success in these countries supports our confidence that it will continue to transform diabetes care and position us as a market leader everywhere Omnipod 5 is available. We remain on track with our Omnipod 5 plus G6 European launch plans with the aim of making Omnipod 5 accessible to the majority of our European customers by the end of 2024. We are also thrilled to begin our journey launching Omnipod 5 integrated with Abbott's Freestyle Libre 2 Plus sensor. I'll speak to this new opportunity in a moment. In addition to our Type 2 pivotal study progress, we are meaningfully advancing several other clinical initiatives. We are excited to attend the ATPD International Conference in Italy in a couple weeks where we will present data for the Omnipod 5 plus G6 randomized controlled trial. This RCT compared Omnipod 5 to non-AID pump and included study sites in the US and France. We are thrilled to have recently published in the Diabetes Technology and Therapeutics journal real world evidence from almost 70,000 people with Type 1 diabetes, demonstrating Omnipod 5's effectiveness in a large diverse population. The data are impressive and demonstrate the strength of the Omnipod 5 algorithm in the real world, delivering leading time and range and very low hypoglycemia, reinforcing Omnipod 5 as the obvious choice for clinical outcomes and personalized diabetes care. Central to everything we do is our mission to simplify life for people with diabetes. We want to make it easier for people to get prescribed therapy, get set up on therapy, and use therapy consistently over time. This is the point of our evolution feasibility study taking place in New Zealand. Our intent is to have a next generation algorithm that will further drive simplicity of use. We completed the first feasibility study and participants with either Type 1 or Type 2 diabetes, commencing initially in supervised hotel setting and then progressing to at home use. We are pleased with the preliminary results and are analyzing the data and making modifications for the next round of subjects. We will present early feasibility results at ATPD. Lastly, we continue to actively enroll participants in our RADIAN study in France, the UK, and Belgium, which is our Libre2 integration trial. We began enrollment in September 2023, which is now halfway complete. Feedback has been tremendous, and physicians new to Omnipod 5 appreciate its simplicity and potential to reach many more pump-naive users. As a reminder, both our G6 and Libre2 studies are designed to provide the evidence we need to elevate Omnipod 5 status as superior first-line therapy and help drive our pricing and market initiatives as we further roll out Omnipod 5 with multiple sensors across our international markets. I'll now provide an update on our innovation progress and we'll focus on three key areas, expanding the Omnipod 5 platform, moving upstream in the Type 2 market with Omnipod Go, and building our digital and data capabilities. Many of you have heard us say that our current Omnipod 5 system is our quote, minimum viable product. That's easy to forget given how quickly the market has adopted Omnipod 5 and made it the leading offer. Our current version is on only one operating system, Android. It is integrated with only one continuous glucose monitoring partner, Dexcom, and until recently was commercialized with only G6, and it contains our first generation algorithm. This is about to change with platform extensions that will strengthen our leadership, deepen our competitive moats, and allow us to open up Omnipod 5 to many more customers. To start, we are excited to have commenced our U.S. limited market release of Omnipod 5 with G7 over the last two weeks. This initial release will allow us time to test the market and build product at scale to prepare for what we are confident will be a very successful full market release of G7 this year. We anticipate an acceleration and new customers starts following full launch, which will help to fuel our revenue growth more meaningfully in 2025 and beyond. We are also on track with our planned limited market release of Omnipod 5 with Libre 2 Plus in the first half of this year in the Netherlands and UK, made possible by the CE mark approval we received earlier this month. We are excited that the option for customers to use Omnipod 5 with both G6 and Libre 2 Plus will enable us to reach many more patients. Our recent and upcoming CGM integrations are important milestones in providing choice to tens of thousands of customers who want to use Omnipod 5, and we believe both integrations will be significant catalysts for our growth in 2024 and beyond. Rounding out near-term innovation, we are planning for our U.S. launch of Omnipod 5 with the G6 system with our iOS app this year. This will mark a major innovation milestone because so many of our U.S. customers use Apple iPhone and prefer to carry only one phone. Another innovation that will allow us to reach more people and further expand our total addressable market is Omnipod Go, a solution designed for individuals with type 2 who naturally progress to requiring basal-only insulin and want a simple way to receive their daily dose while avoiding the burden of injections. Our commercial pilot is underway and it will help us refine our commercialization plans. Omnipod Dash has already made insulin the leader in insulin delivery for people with type 2 diabetes, and with Omnipod Go, we are well positioned to move upstream in the patient care pathway. When we achieve clearance for Omnipod 5 in the type 2 market, we will bring all of the AID system to this market. With these three products, our aim is to deliver an Omnipod portfolio that meets the full range of needs of people with type 2 who require insulin as a part of their care. We are excited about our innovation in this space and our ability to address the unmet needs that exist in this patient population. It is a massive global market that we expect will continue to grow, and we have the clear lead to pursue this market opportunity. We are also excited to build on our digital and data capabilities. One of the breakthrough features of Omnipod 5 is the real-time data provided by SIM cards in every controller. We constantly hear from physicians and patients how much they appreciate not needing to plug in for real-time usage data, and 100% cloud connectivity has already given us the opportunity to publish the largest real-world data set on AID. Over time, we plan to use the data to speed up product development, further improve the user experience, streamline physician workflows, and build on our competitive advantages. We also continue building digital and data-driven products to simplify diabetes management for both customers and caregivers. In closing, Insulet continues to set the standard for the industry. With a strong 2023 behind us, we see multiple catalysts in the coming year and we are confident we will drive significant growth and continued success. I want to thank our Insulet global team for your dedication and deep passion for our customers and your commitment to delivering innovation. You are the reason for our success and our ability to continue to drive our mission to simplify life for the millions of people with diabetes around the world. With that, I will turn the call over to Lauren.

Thanks, Jim. 2023 was another exciting year for Insulet and the fourth quarter was no exception. We have strong momentum with many catalysts that will drive revenue growth and margin expansion in 2024 and over the long term. In Q4, we generated strong global new customer starts, fueled by the continued high demand for Omnipod 5, not only in the U.S., but also in our first two European markets. As a result of our Q4, driven by global Omnipod growth of over 35%, we benefited from a shift in order timing and an increase in days on hand at certain pharmacy distributors, which I'll speak to in a moment. Without these benefits, our results still exceeded these guidance ranges. On a reported basis for total revenue, foreign currency was a 130 basis point tailwind compared to Q4 of last year. U.S. Omnipod revenue growth was 43%, which continues to be driven by our annuity-based model and growing U.S. pharmacy volume. This includes an increasing volume contribution from Omnipod 5 and the related premium for pods in the U.S. pharmacy. Pharmacy channel access continues to be a benefit for the many reasons Jim spoke to, and our efforts to increase volume through this channel have resulted in almost all of our U.S. volume going through the pharmacy channel. The recurring net volume benefit we recognized in Q4 from new customers who received their starter kits and first refill orders was in line with our expectations and remained consistent with Q3 levels. We expect this trend to continue. Also as expected, the same net volume benefit from existing customers converting to Omnipod 5 was immaterial since the vast majority had already previously converted. In Q4, U.S. revenue benefited from two dynamics not previously contemplated in our guidance. First, our largest U.S. pharmacy wholesalers collectively placed an estimated $20 million to $25 million in orders that were accelerated from the first quarter of 2024 in advance of our implementation of a new ERP system at the start of 2024. The second benefit was an increase in estimated channel inventory days on hand of approximately $10 million to $15 million as pharmacy distributors returned to their normal levels. As a reminder, in the first half of 2023, we called out a reduction in inventory days on hand below normal levels. What this boils down to is approximately $30 million to $40 million in revenue in Q4 that we had not anticipated, contributing approximately 12 points to our U.S. revenue growth. We are proud of our fourth quarter U.S. performance, especially given the tougher comparison due to the Omnipod 5 full market release in August of 2022. Additionally, new customer starts in Q4 were slightly down from Q3 as expected as the market is moving from Dexcom's D6 sensor to D7. We are excited to have launched our U.S. limited market release of Omnipod 5 with D7, and as Jim shared, we expect new customer starts to accelerate throughout 2024 as we ramp our commercial efforts. Overall, our U.S. business and related revenue growth are very strong, fueled by Omnipod 5's success and continued robust demand. International Omnipod revenue increased 12.5%, which was above our expectations. Growth was primarily driven by continued strong adoption of Omnipod Dash, and to a smaller degree, a benefit from our Omnipod 5 launches in the UK and Germany, both of which drove notable increases in new customer starts. On a reported basis, foreign currency was a 550 basis point tailwind over the prior year, which was approximately 250 points favorable versus our guide. In Q4, our estimated global attrition and utilization trends remained stable. Drug delivery revenue was almost $9 million, representing a $5.5 million increase, which was above our guidance range due to timing. Gross margin was .9% up over 1,200 basis points. Excluding the impact of the 2022 medical device corrections, adjusted gross margin increased 620 basis points to .7% in Q4 2023. This exceeded our expectations due to favorable manufacturing costs and product mix. The increase in adjusted gross margin was primarily driven by improved manufacturing efficiencies and favorable mix that included a premium from volume growth in the pharmacy channel. Partially offsetting the favorable contributors were expected higher production costs as US manufacturing continues to ramp and become a larger portion of our total production. Operating expenses increased in line with our expectations as we invested in our business to support our strong growth trajectory, including gearing up for near-term product launches globally. Adjusted operating margin was .7% and adjusted EBITDA was .9% of revenue. Both were above our expectations, primarily due to the $30 million to $40 million revenue benefit I mentioned, which had an estimated 360 basis points favorable impact on adjusted operating margin. To a lesser extent, both outperformed due to our -than-expected gross margin. Turning to cash and liquidity. We ended the year with over $700 million in cash and the full $300 million available under our credit facility. At the end of January, we successfully repriced our term loan B at a lower interest rate, which will reduce interest expense on an annualized basis by almost $2 million. We also achieved the milestone during the year of turning free cash flow positive, generating approximately $70 million in 2023. We continue to strengthen our financial position, giving us the flexibility to invest throughout our organization to drive long-term sustainable growth, while at the same time expanding our margins and generating positive free cash flow. Now turning to our 2024 outlook. We continue to expect another year of large dollar growth, even with the significant volume benefits realized in 2023, most notably from our Omnipod V ramp. We expect to approach total company revenue of $2 billion at the high end of our guidance range. For the full year, we expect total Omnipod revenue growth of 13% to 18% and total company revenue growth of 12% to 17%. As a reminder, our total company growth expectations exclude approximately three points due to the estimated $20 million to $25 million in orders that were accelerated to the fourth quarter of 2023. For U.S. Omnipod, we expect revenue growth of 16% to 21%, driven by strong Omnipod V adoption, as well as recurring revenue from Omnipod Dash and the benefits of our annuity model and pharmacy channel access. As a reminder, we have tougher comparison in 2024, resulting from the significant two-script and retail channel net stocking volume benefits in 2023. In addition, our expectations exclude approximately four points of growth due to the estimated orders that shifted into 2023. When factoring this into both periods, our normalized expectation for 2024 at the high end of our range is in line with the color we provided on our third quarter call of -20% growth. We anticipate new customer starts in the first half of 2024 to be slightly lower than the levels we had in the second half of 2023 due to normal seasonality trends, and we expect an acceleration in the second half of 2024, following a full market release of Omnipod V with G7. Also, as a reminder, estimated revenue from Omnipod V with our iOS app and from Omnipod Go is expected to be immaterial. We also currently expect the cadence of our revenue growth to be weighted more towards the second half of 2024 due to the timing of new customer starts, partially offset by the Q4 2023 stocking benefit. For international Omnipod, we expect revenue growth of 7% to 10%, which is in line with the 24 color we previously provided of high single digits. On a reported basis, we are assuming no foreign currency impact. We expect growth to be driven by ongoing Omnipod Dash adoption and from our recent Omnipod V launches in the UK and Germany. We expect continued headwinds in the countries where we do not yet have Omnipod V to partially offset this growth. We are excited to enter our first European market in the first half of 2024 with Omnipod V integrated with Abbott's Freestyle Libre 2 Plus and to launch Omnipod V with G6 in another market around the same time. As a reminder, given the nature of our annuity model, we expect these launches to more meaningfully contribute to our growth rate in 2025. We continue to expect the accelerate in the second half of the year to a range of high single digits to low double digits, primarily due to a more meaningful contribution from our Omnipod V UK and Germany launches and to a lesser extent, the additional launches in 2024. Lastly, for drug delivery, we expect a 50% to 60% decline in line with the 2024 color we provided. Turning to 2024 growth margin, we expect a range of 68% to 69% and anticipated benefit from favorable product mix and manufacturing efficiencies. Partially offsetting these tailwinds are higher costs associated with our new product launches. We expect growth margin in the second half of the year to be higher than the first half due to accelerating revenue throughout the year and continued manufacturing efficiencies. In 2024, we plan to expand both growth and operating margins while driving market growth. We expect operating expenses to increase as we invest in R&D and clinical and expand our sales force and other functions to support our commercial efforts and growth initiatives, including our near term product launches. Our sales force expansion includes hiring some reps specifically focused on pediatrics, a population for which Omnipod has always captured a large share. Even with increased investments, we have many opportunities to significantly expand margins and increase shareholder value and we remain committed to doing just that. We expect operating margin to be approximately 13% up approximately 100 basis points from 2023 adjusted operating margins. When factoring in the 130 basis point year over year unfavorable impact in 2024 from the $20 million to $25 million shift in order timing, we expect operating margins to be approximately 200 basis points higher in 2024 over 2023. We expect operating margin to significantly improve in the second half of the year over the continued manufacturing improvements. We have many catalysts for growth in 2024 and considerable opportunities to drive further margin expansion over the near and long term coming from scaling the business efficiently even with the continued focus investments in our robust innovation pipeline and commercial efforts. We expect capital expenditures to almost double from 2023 due to the manufacturing facility as well as investments to support continuous improvement efforts in our other manufacturing locations and to a lesser degree investment in IT infrastructure. Turning to our first quarter 2024 guidance, we expect total Omnipod growth of 15% to 18% and total company growth of 17% to 20%. Our total company revenue expectations exclude approximately six points of growth due to the orders that shifted into 2023. For U.S. Omnipod, we expect growth of 19% to 22% which excludes over eight points of growth due to the orders that shifted into 2023. For international Omnipod, we expect growth of 5% to 8%. On a reported basis, we estimate a favorable foreign exchange impact of approximately 100 basis points. Finally, we expect Q1 drug delivery revenue to be approximately $5 million to $6 million. In conclusion, we delivered another quarter and year of significant financial performance and strategic execution. We have strong momentum at the start of 2024 with many catalysts ahead and as a result, we are in a fantastic position to continue to grow and scale our business. The global market opportunities are tremendous and we will continue to invest in innovation with an increased commitment to significant margin expansion. We are well positioned to drive long-term value creation for our shareholders and to deliver on our mission for our customers.

With

that, operator, please open the call for questions.

Thank you. If you have a question at this time, please press the star key followed by the number one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press star one again. We are limiting each participant's question to one. However, please feel free to go back in the queue and if time permits, we will be more than happy to take your follow-up questions at that time. Our first question comes from the line of Travis Deed with Bank of America. Please go ahead.

Hey, thanks for the question. I wanted to ask about the guidance on U.S. growth. You just do the math using -over-year growth rates. You get 2% from stocking, which implies like 18 to 23% versus kind of the mid-20s guide before, but I know you said in the script, like there was really no change to the guidance and I guess if you just do it on dollars, you kind of get to the same place. So maybe you just provide some clarification on the U.S. guide and how it's changed versus three months ago.

Hey, Travis. Thanks for the question. So yeah, just in November when we gave guidance, it really hasn't changed much in our view. As I mentioned in the prepared marks, we had a $30 to $40 million shift in revenue or sorry, incremental revenue of that 10 to 15 million was an increase in days on hand inventory levels. And so that we had seen the inventory levels brought down earlier in the first half of the year. So that was a piece of it. The rest of it, the 20 to 25 million was the shift that we saw in order timing from Q1 to Q4. So for that, that was an advance of our ERP. And if you were to normalize for that, which contributed about 12 points benefit to our U.S. revenue growth rate, we really achieved the high end of our guidance range there.

Your next question comes from the line of Robbie Marcus with JP Morgan. Please go ahead.

Hi, this is actually Rohin on for Robbie. Thanks for taking the question. You came off a really great year on both the top and bottom lines with continued health and new patient growth in U.S. as well. I was wondering if you could elaborate more on some of the key growth drivers to new patient growth as well as margin expansion in 2024 and beyond.

Thanks Rohin. I'll take the first shot at that, but then I'm sure Lauren may want to comment as well. I mean, I think that the main, you know, there's just a core driver to new customer starts for us, which is Omnipod 5 is clearly the most preferred product in the market. We lead in new customer starts wherever we take Omnipod 5. We lead in new customer starts for people coming off of MDI and we continue to take a lot of competitive shares. So the Omnipod 5 offering as it exists today is already an underlying growth driver for us. Then there are a number of things that we'll bring to market in 2024 that will drive a lot of growth. We'll be able to drive international expansion for Omnipod 5 in 2024, as we said. We're aiming to get the G6 product to market into the Netherlands along with sensor of choice in UK and Netherlands in the first half. And as we've said by the end of 2024, we expect to have Omnipod 5 available to the majority of our customers in our European markets. And then obviously G7, you know, so we're really excited to have been able to accelerate our G7 LMR by a couple of weeks a little bit earlier than our expectation. We've been in market now LMR for not quite three weeks, about two and a half weeks and aim to bring full market release of G7 during the year, which we think will continue to drive new customer starts for us. So we're very, very excited about that. So there's a lot of catalysts coming in our innovation pipeline that will drive growth on top of the already existing leading market position for Omnipod 5. But I'm sure Lauren will want to pick up on, at least I'm guessing Lauren, want to pick up on some of what you have there as well.

Yeah, thanks, Jim. So yeah, we have a lot of additional opportunities for improvement, especially if we exceed our revenue targets. And you saw that in Q4, we had tremendous operating margin. It was over 20% on a adjusted basis. And if you normalize for the revenue shift, it was about 17%. So if we can exceed revenue, we can have a lot of incremental margin opportunity. But keep in mind that we will be balancing that with investment. So as Jim mentioned, we have a lot of new product launches coming up, and we want to make sure we're executing on our strategic imperative to drive future growth in 2025 and beyond. So we will be balancing that with the revenue drop through to the bottom line.

Your next question comes from the line of Jeff Johnson with Baird. Please go ahead.

Thank you. Good afternoon, guys. Jim, you're encouraging to hear that O5 and the majority of EU markets by the end of 2024. That's the good thing. I didn't hear anything on G7 integration with O5 in Europe in 2024. I know you are specifically not providing that, but any color you can provide there, especially in the context of talking about your US growth accelerating in 2024, just as the market is starting to move to G7 and you need to get that FMR on G7 out there in the US to then take advantage of that move to G7 that Dexcom is seeing. So I guess, you know, it sounds like that lack of G7 integration could be a headwind in 24 offset by the O5 expanding EU. So just how do we think about those two, you know, disparate factors, if you will? Thanks.

Yeah, thanks, Jeff. And hi, nice to hear from you. One way to think about this is that we're prioritizing the sequencing, right? And so we know that driving the integration with sensors and driving sensor of choice, as we call it for customers, is really, really important. And you can see in a way, you can see what we're doing here, because we're already into LMR with G7 in the US. We're going to learn a lot about that integration here. We feel very comfortable with it as it has been through wear studies. But, you know, you put the LMR out in the market to see the product in the wild, right? And make sure you're happy with it, make sure customers are having a great experience. And we'll learn from that LMR in a way that will allow us to accelerate G7 in the US and then internationally. We haven't guided the timing on anything outside of SMG7, but the LMR is important in that way. Very similarly, you know, we're looking to be able to accelerate our LMR for the Libre 2 Plus integration in Europe and working hard to get that to market. The experience we're having right now with the Radiant trial, which is our Libre integration trial in Europe, suggests that that's a great wear experience for customers as well. And so you can see we're accelerating that LMR in Europe. We'll learn from that LMR too. So, and we haven't given any timing guidance on Libre for the US, but you can see what we're doing is we're kind of parallel processing the two LMRs to maximize our learning and kind of optimize our resource use across the geographies, if that makes sense. Very high priority for us to get sensor integrations up and running to give choice. And also because what we want to do is we're really prioritizing making sure that customers that want to be on OmniFOD 5 can get on OmniFOD 5. And that's our top priorities to provide this. You know, it's really, it's proven, OmniFOD 5 has proven to be a revolutionary offer. Lots of people want to be on OmniFOD 5. So we're working hard to make sure we get the sensors integrated as quickly as we can and into the various geographies as quickly as we can to provide that kind of access and option to customers and working hard to optimize the way we're doing it so we can maximize our learning and time to market.

Our next question comes from the line of Jason Edward with Raymond James. Please go ahead.

Good afternoon. Just on international, is your expectation that you'll be able to capture price with OP5 and then kind of what is the gating factor here on not launching into and launching into new European geographies a little quicker than fully by year end?

Yeah, Jason, great question. It's, you know, it has been, we've talked about this consistently in the past, but what we want to do with OmniFOD 5 is generate the evidence we need, which is, you know, we're doing with our G6 RCT, which I mentioned in the comments we're doing with our radiant trial. We're generating the evidence we need to establish OmniFOD 5 as a first line offering and then go and negotiate for reimbursement across our international markets, you know, reimbursement levels that are commensurate with the extra value we're creating the OmniFOD 5 offering. And so our goal is to drive a price premium. It's a little bit different from what we did in the US because when we launched OmniFOD 5 in the US, we launched it into the pharmacy channel at pricing parity with Dash because we knew that would streamline time to full coverage in the market. So we got to full coverage. In European markets, what we need to do is make sure we're negotiating kind of, you know, reimbursement bodies, different in every market, and there's tenders, there's ministries of health and so on, but we need to negotiate those market but we have to generate the evidence that's required to be able to have that conversation. So far, we've been very successful with that. So, you know, with our working in the UK, we're very comfortable with where we've landed with reimbursement levels in the UK, working in Germany, and so on. And so we're going to continue to drive that and work really hard to achieve a premium for OmniFOD 5 everywhere we launch it. And then remind me the second part of your question, it was all the gating factors. Gating factors, it's a little bit different by market. Sometimes it's reimbursement, sometimes it's, you know, sort of cloud connectivity. We've made a lot of progress on that latter technical front. And then it's, you know, just preparing for commercial launch and making sure that everything is lined up to do that. We're making terrific progress. And as we've said, I just want to clarify, actually, I think Jeff just said, that we said we'd be in the majority of our markets. We haven't said that. We've said by

the end of 2024, there may be a technical problem on the call, but we said by the end of 2024, we will have the majority of our European customers have OmniFOD 5 available.

Our next question comes from the line of Larry Beegelson with Wells Fargo. Please go ahead.

Larry Beegelson, Wells Fargo, Good afternoon. Thanks for taking the question. I wanted to follow up on Travis's question on the guidance. So I guess the crux, Lauren, of my question is, did anything change from the Q3 call and from JP Morgan? So you said the high end, when you make these adjustments, you said the high end of this guidance implies mid-20s. So, you know, why the high end? I mean, is there, was there an incremental, you know, change? And I think you said at JP Morgan, new starts would grow year over year in 2024. I didn't hear that in your comment today, and I'm just curious, you know, Lauren, your guidance philosophy in general, has anything changed from historically, you know, insulated guided, you know, pretty conservatively? Thank you.

Larry, we're having a technical problem

on the call. And so I'm going to, I'm going to take my best shot at answering your question. And so I'm going to say nothing's really changed from our guidance. The guidance we've given on revenue and on new customer starts, I mean, it's pretty consistent with the color we gave on the November call. And the big move is actually that the, you know, the unusual order pattern where we had 20 to $25 million of revenue pulled forward. We're still guiding to record new customer starts in 2024. The change, the only real change in the guidance that we're giving compared to color is that we're guiding to a 13, roughly a 13% operating margin for 2024, which is actually an increase from the color we gave on the November call. And there's, there are a number of opportunities for us to do that, but, you know, we delivered, we delivered really strong operating through 2023 and actually exceeded what we had guided to for 2023. Because if you remember our guide in 2023, it was the side single digits, you know, which would call it like, you know, nine, nine and a half plus, and we ended up delivering well above that. And we're now guiding to 13, which as Lauren explained in the prepared comments, represents a hundred basis points over what we achieved at the end of 2023, but more than 200 basis points or roughly 200 basis points above what we would have achieved without the revenue pull forward. That 13% OI guide

is the only real change from the color we gave in November, if that makes sense.

Our next question will come from the line of Margaret Caxer with William Blair. Please go ahead.

Good afternoon, guys. Thanks for taking the question. I wanted to maybe follow up on the HCP prescribers, you know, obviously that's the number that continues to grow quarter and quarter and quarter. Curious if you can provide any details around them, you know, are these folks routinely prescribing? Are you saying growth number of prescriptions? You know, maybe how does this compare to the number of pump prescribers in the US? And, and sorry, it's a long-winded question, but it really gets at this concept of how can you open up the part of the intensive inflammation population type one or type two that is being seen outside of the endo's office and really scale that effort? Thank

you. Thanks, Margaret. It's a great question. And again, I'll start and if Lauren wants to chime in on the back, I'd welcome that. Just to go back to context, we actually didn't put this in the prepared comments this quarter, but we've the around 7,000 to 7,500 endos in the US. We know that a number of prescribers that we have are either endocrinologists themselves or their so-called physician extenders, which include nurse practitioners and physician assistants, but we're clearly getting prescriptions beyond that. We're clearly getting prescription writing outside of endo practices in PCP practices and in smaller practices and that dynamic continues to grow and we can see it in our own data. We don't have perfect insight into it out of the various available data, but we can see we're reaching more and more healthcare practitioners and that's we believe we're doing that through word of mouth through our promotion activities, which include both direct to patient activities and also direct to physician promotional activities online. And then the other thing I'll say is that it's been very, very powerful for us, you know, sort of along the same lines. The OmniPod Go commercial pilot has proven to be a terrific investment for us this year because what we're learning, we're learning a lot more about what happens in the primary care channel for people living with diabetes and I'm just a couple of things we're seeing. We've learned a lot about the target patient population for OmniPod Go. We've learned that primary care practices when they think pump, they think big kludgy thing with the tube that they would never prescribe and then when they see OmniPod there's a little bit of a light bulb coming on over the head dynamic and they say, wait, you know what, that's so easy. My patients could do that, we could do that and so, we're very confident we're going to be able to drive a demand for the OmniPod platform across primary care. And I think we're seeing more type one patients than we anticipated in the primary care channel. So to your point, we're very optimistic that as we continue to drive learnings out of our OmniPod Go pilot, we're going to be able to find new, you know, kind of new avenues for driving demand for OmniPod and really driving a pod therapy, OmniPod therapy into the world where patients need it most. And so we're very optimistic about that. And so we continue to see that trend as a positive signal for us, but we're

really excited about what we're learning out in the world with our commercial pilot Go.

Your next question will come from the line of Josh Jennings with TD Cowan. Please go ahead.

Hi, good afternoon. Thanks for taking the question. I was just hoping to better understand pricing dynamics through the pharmacy channel in the US for OmniPod 5 and Dash. It was the reimbursement stable that Insulate was receiving for OmniPod 5 and OmniPod Dash in 23 and how should we factor in reimbursement levels and pricing for OmniPod 5 and Dash in 2024? Thanks.

Yeah, so really it's more about a volume business at this point. We did get a big price lift throughout 2023 from the conversions into the pharmacy channel, but as we've mentioned previously, those conversions have largely, are largely complete by this point. So we're not seeing that going forward. We did have a price increase like we normally do in early September, which is, was pretty minimal. It's just under 3% kind of in line with the cost of living adjustment. So just keep in mind there though, we don't see the full benefit of that because some of it goes to the CDM in terms of rebates and to the wholesaler fees. So at this point for 2024, I would pretty much say that you should focus on the volume, that the price has leveled off. The great news is that we are getting that continued price lift going forward, but it shouldn't be an incremental change.

Your next question comes from the line of Joanne Wench with Citi. Please go ahead.

Good afternoon. This is Anthony Onford-Joanne. Thanks for taking our question. 2024 is kind of an estimate year, you know, maybe 2025 as well, but can you talk over the longer term, you know, 2026 and beyond where gross margins and operating margins potentially could go and how you got there? Thank you.

Yeah, I'm happy to start off and then, Jim, feel free to add on. Yeah, we definitely feel like we have room for expansion both on margin and gross margin in the near term and in the longer term. You know, we did great in Q4 and we have lots of opportunities as we're setting up with the product launches that we have this year that'll, you know, accelerate the top line and be able to allow us to drop more through. We haven't put out guidance beyond 2024, but we are planning on doing a long-range plan later in this year.

Your next question will come from the line of Matthew O'Brien with Piper Sandler. Please go ahead.

Good afternoon. Thanks for taking my question. It is going to be one question, I promise. The first part is just more clarification, kind of to Larry's question earlier, but I'm looking at the stock down kind of, you know, mid to upper single digits in the aftermarket. I think it's on this guidance commentary and again, the high end of the range gets you to that 25. Was it a street modeling issue at 25% versus, you know, where we, you know, because it should have been 23, 24. I'm just making sure there's nothing competitively or pharmacy related that we should really be worried about. And then the real question is, Jim, you know, when you guys came out with 05, I think you went from 80-20 MDI to competitive conversions all the way to 60-40, and then it went to 70-30. Now we're back to 80-20. Is it getting tougher and tougher to take those competitive conversions? And with G7, do you think that that will start to get a little bit better, a little bit easier throughout the course of this year?

Thanks. We'll have Lauren start on the guide and then I'll pick up on the competition. Go ahead, Lauren.

Sure. So for 2024, even with the volume benefit that we realized in 23, we're starting to very strong revenue growth. We expect to achieve almost 2 billion in revenue and our guide represents 300 million of revenue growth in terms of dollars. So your question in terms of what changed from the color we provided, it was really just that revenue shift of 20 to 25 million of orders that were, would have been Q1, but were placed in advance of our ERP implementation. So the estimated impact of that is three points on the total company and four points on U.S. Omnipod. So overall, our guide is strong and as we've mentioned, we have many catalysts for growth in 2024 that's going to help accelerate it, and particularly in the back half with those new customer starts, and provide strong revenue growth for the year and into 2025 and beyond.

Matt, I was just going to say, Matt, you nailed it. I thought I heard you say that U.S., the street's modeling now 25% on a normalized basis. So if I got that right, that you said that's the U.S., that's exactly right for the year on a normalized basis. And Lauren nailed it when she said the four point impact. So when Lauren provided some color on the Q3 call that we would be in mid 20s, she was referring to 24 to 26, around there, and at the midpoint were spot on what we were expecting for U.S. And that's about, if you do the math, about 21% on a normalized basis for total Omnipod, and it gets you to the total company growth of 20. So it's spot on from the color that Lauren gave in November. We just didn't expect that shift, which is the $20 to $30 million shift that happens, or 20 to 25, ends up being double to the 40 to 50, because it comes out of one year and goes into the other. So that's where she was trying to normal set. So hopefully that answers your question on that piece. Sorry, Jim.

No, and we can always clarify this too, so, but it's a decrease in denominator, increase in numerator for 24, you get the normalized number, right? So it's a double whammy on that 20 to 25. So the underlying guide remains the same, effectively. On the competition, yeah, we continue to have really good new customer starts. And historically, we always had 80-20 of MDI and competitive switching. After the launch of Omnipod 5, we obviously caught a lot of competitive switchers, and we've done really, really well. We continue to have. So if you think about pre-Omnipod 5 and that 20% of competitive switchers, and with Omnipod 5 and 20% of competitive switchers, it's a larger number than it was, right? So because new customer starts are up overall. So we continue to do very, very well. And the underlying dynamic there is we also retain the vast majority of customers that we get from competitors. Retention is very, very strong. And instead of that, we do think, we had the benefit now of hearing our two competitors' calls, and we have the benefit of seeing what's happening out in the market. We don't see, there's little things around the edges, I would say. We don't see any fundamental underlying shift in the competitive dynamic. Omnipod 5 continues to be the preferred product. But I would say that one of our competitors has done a better job of staunching the bleeding in their installed base. And so you can see a little of that dynamic going on in the market. But we're still clearly the preferred offer, so clearly winning with MDI and

just winning with new customer starts overall very, very clearly in the market.

Your next question comes from Mike Cradkey with Learing Partners.

Hi, everyone. Thanks for taking your questions. So you've capitalized on having a competitive advantage in Type 2 with broad pharmacy access. How are you planning on defending that position in the market as we start to see additional pumps expand into the pharmacy channel on both a near-term basis and then looking ahead to 2025?

Great question. Thank you. Pharmacy is, you know, our offer, the Omnipod platform offer is much better suited to the pharmacy channel than tube pumps are. It's much, much better suited. Tube pumps, at the end of the day, continue to be durable equipment. And there's all kinds of things that, you know, I could go into the weeds here and talk about this, but I'll just say it's not a surprise that we see competitors trying to figure out how to get into the pharmacy channel with a durable tube pump because we've been so successful in establishing the pharmacy channel for AID. And, you know, as we would expect, you know, competitors are, we've established market leadership across basically the whole range of our offer, and competitors are going to chase that. What we've learned is there's a very big learning curve in pharmacy. It's very, very different from the DME channel. The economics work better for us because there's, you know, in all cases, the value is actually in the pump, whether it's a durable pump or it's the pod. And the fact that the value is created in our consumable, which is the pod, gives us an inherent advantage as we, you know, it starts to get a little abstract, but it gives us an inherent advantage as we're in that channel. And you couple that with the pharmacy channel, we have established contracts across the PBMs, and we've had very successful growth with all of our PBM partners. We think we have a very defensible position there. People who use insulin go into the pharmacy to get their insulin, whether they're getting it, you know, from mail order or retail pharmacy. So it's a great place for them to also get their AID pump therapy. And Omnipod continues to be very uniquely positioned and the value prop of Omnipod in the pharmacy channel will continue to

be

very

uniquely positioned as we go forward.

Your next question will come from the line of Chris Fesquale with Nefron. Please go ahead.

Thanks. Jim, your comments on what you've learned so far from the GO LMR were really interesting. It sounds like that's going pretty well, but then I think I heard the guidance really doesn't assume any benefit from GO in 24, which makes it sound like a full launch isn't planned anytime soon. How are you thinking about the timing for a full launch? And what's really the gating factor there? What boxes do you need to check before you're ready to expand the commercialization?

Yeah, great question. The way to think about Omnipod GO is that, you know, we hear different language about this and I'll just be really clear. We're not in limited market release with GO. We're in a commercial pilot, right? And so that's a step before, I think I said this last quarter on our call as well, that's a step before an LMR. The product itself is ready, you know, it's out on the market, it's fully approved, we continue to grow coverage for it, you know, so that's a step, but we're ahead of schedule and coverage. So the way to think about the Omnipod GO commercial pilot is the gating factor is not timing, it's learning, right? So what we're using it for is to establish the right commercial model, both for GO and for the primary care chain. And one of the reasons we're so excited about the pilot is that we are learning an awful lot out of that pilot. And so, and you know, where we're going to land on this thing, whether we commercialize in 24 with GO, or we commercialize, you know, get to more of an FMR in 24, sometime in 25, where we're going to land is we're going to be in the primary care channel first and second, you know, one way or another, we're going to have call points in primary care. And the other thing is we will have the broadest offering for people living with type 2 diabetes who need insulin delivery. So we're already in the market leader with Dash in that space, very clearly. We know Omnipod, we have our pivotal trial going to Omnipod 5. And as we said before, we know Omnipod 5 is actually being used off label. In a lot of cases, we're not promoting Omnipod 5 off label, but we'll have, you know, our goal is to have the label for Omnipod 5 in the short order coming out of our pivotal trial. And we, you know, we continue to have a plan to file with the FDA for that label extension in 24. And we'll have Omnipod GO. And that gives you the whole coverage for people using insulin with type 2, all the way from I'm initiating basal insulin to I'm using intensive insulin. And so we'll have full portfolio products and we'll have a very clear way to commercialize that in both primary care and in the endocrinology channel. So that's why I say I'm very excited about the commercial pilot with Omnipod GO. We are learning a ton and it's going to make us much

better commercially as we get into that and get that full portfolio on market.

Our next question will come from the line of Steve Lichtman with Albinheimer. Please go ahead.

Steve Lichtman Thank you. Hi, guys. As you start opening up the opportunity here to the Libre platform outside of the US and then in the US, can you give us your latest thoughts on the size of that opportunity? There's been estimates on what that new opportunity set looks like. Would be great to get your latest color on that. Thanks.

Yeah, we think it's a really big opportunity. If you look at the sensor market, you've got millions of people using Dexcom sensors and millions of people using Avid sensors. So the G67 family products and the Libre 2 and Libre and now emerging Libre 3 family products. And by creating the integration across that range, so prioritizing G7, prioritizing Libre 2 Plus and 3 that we're working in parallel, it opens up a really large substantial market for us. The two, we love working with both of our partners. They both have great technology. They're both really good partners. Development pathway with both of them is really strong. They have slightly different positions in the main geographies of the US and Europe in terms of their installed base, but both of them have very large installed bases. And both of them have, as we've always said, CGM paves the road for us because people get used to having an on-body experience with a sensor, and it makes it much easier for them to then jump to an on-body experience with an Omnipod. And so we think it opens up, you can go look at the estimated market shares for our two partners, but we think the Libre integrations open up a large installed base

both

in Europe and the US of people

who will be ready for Omnipod because they're used to an on-body CGM experience.

Your next question will come from the line of Marie Thibault with BTIG. Please go ahead.

Hey, good afternoon. This is Sam Wong from Marie. Thanks for taking the question. Maybe I can follow up on some of the type two comments. And just looking at pivotal data coming up at ADA and then filing for a label expansion, how much of an uplift could that be once you do get the expanded label there? Just considering 20, 25% of new patients starts already coming from type two.

Thanks. Thanks, Sam. If you just look at the size of the end markets there, and I'll repeat numbers that we shared before, in the US there are about 1.6 million people living with type one diabetes, and if that market is about something less than 40% penetrated with AID therapy, then in the type two market there are somewhere between three and four million people living with type two who are on basal-only therapy, and somewhere around two and a half million people living with type two in the US who need intensive insulin therapy, so basal plus bolus. Omnipod 5 is really aimed at that intensive insulin therapy population of about two and a half million people in the US, and therefore it's a larger end market than Omnipod 5 plays in now with its current label. We know that that market is less than 5% penetrated with AID therapy, and we're already the market leader in that segment of the market because Omnipod Dash has a label there, and we know we're the clear market leader in space. So we're very optimistic. Omnipod 5 is very easy to use. It takes a lot of the burden off of managing your diabetes. That's why it's been so successful in the type one population, and we're very optimistic about that value proposition going to the intensive insulin using type two population, which is a larger end market than the one we're playing in today. So we think it is a really important opportunity

and a market that, by the way, will continue to grow over time.

We have time for one more question. Your final question comes from the line of Danielle Lentalfi with UBS. Please go ahead.

Hey, good afternoon, guys. Thanks so much for squeezing me in and taking my question. Just a question on the wholesaler stocking and that whole dynamic, because it is something now we have to start thinking about in the model, and I know it's unpredictable, but qualitatively, maybe you could talk about how much visibility you have into when that pod that gets stocked goes on to a patient. I guess trying to get a sense of, is this something that's going to happen to this level every single quarter if they're going off the shelves very quickly? How long does the stocking sort of fit on the shelf there?

No, I mean, it doesn't really stay on the shelf that long. I mean, it's a pretty efficient channel in terms of the visibility into the days on hand. So that's not something that we ever include in our guidance. That's something that we can't control. And so unfortunately, this quarter, we had the double-wary of them taking the inventory level back up after they had taken them down earlier in the year. And then at the same time, we had the ERP pull forward dynamic. So I don't expect that we'd see something of that magnitude. But again, when we have something like this, what we do is we call it out and we tell you when it happens. We don't have the ability to guide to it because it's not something in our control.

And we do have time for one more question. That question will come from the line of Matt Mixick with Barclays. Please go ahead.

Great. Thanks so much. So maybe a bit of a two-parter good news and maybe challenging news question if I could just at the end is you mentioned that you're looking for acceleration on the back of a widely available G7 integration. And I mean, given the new patient share that you're catching now, I just would ask maybe what's, you know, it's very high growth and it's very high share of new patients. So what additional patients do you get with G7 that you're not already capturing just in the advantage that you seem to be having in the clinic? And then the other question is looking out a year, 18 months or so. Not certain, of course, but it certainly seems like there's going to be at some point another tubeless pump on the market from one of your competitors or more. And so maybe just think about your, how do you think about that? How do you prepare for that? How do you, you know, look to continue your leadership in that segment? And how should we investors think about that affecting growth potentially? Thanks.

Thanks, Matt. I'll do those in reverse order. The first one is on the tubeless form factor. We obviously watch our competitor pipelines as closely as we can. And in terms of what is out there publicly that we can see, we don't see anything coming in that timeframe that's even close to what we have on market right now with OmniPOD 5. Just in terms of the whole package, the convenience, the ease of use, the scalability, the wear experience, automated needle insertion. You know, we could go on and about the feature set, but we are very confident in our competitive position. We're never complacent. We have a lot of respect for our competitors. And we know that what, because OmniPOD 5, OmniPOD in general, but OmniPOD 5 has been so successful, everybody wants to chase it. So that just makes sense. And that's how competition works. But we are very confident in our competitive position. And we don't see anything coming in anybody's pipeline that even matches what we have. And we're going to continue to drive innovation. So we're going to extend our lead. On the first part of your question, it's a really good question. Yeah, we're obviously doing very, very well in the market with our existing offer. And as I said in the prepared remarks, it's really, we really see it as our minimum viable product, and we've done so well with it. But on specifically the G6 and G7, you know, what you're seeing, and it's, you know, it's, you can go look analytically at the underlying script data, what you're seeing is G7 is really doing well with new customer stress. There are a lot of people going under G7. And you guys have heard, this is probably corny, but you've heard me use the metaphor before about fishing, you know, if you think of if you think we're out fishing in a stock pond, the pond has a lot of G6 in it. But it's got more and more G7 in it all the time. And so, you know, we want to be able to go out there and fish in both ponds. And proportionally, G7 is a larger and larger part of the market. We want to we want to have now I'm going to

have a lot of growth for us, just like on the five with G6.

This concludes our q&a section, I would like to turn the conference back to Jim's Hollingshead.

Thank you, everybody for joining us today. We are really excited

to have delivered another outstanding year for Insulate. We're focused on extending our leading position with our deep expertise and strong emphasis on innovation, operational excellence and further improving the customer experience. We remain committed to driving value for our shareholders through margin expansion and cash flow generation, all while maintaining our emphasis on investing for growth. I also want to once again thank our outstanding Insulate global team for their dedication and their focus on innovation and passion for our customers. Thank you, everybody. And with that, I'll thank you all and wish you all a great evening. Good night, everybody.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.