Insulet released Q1 earnings today and held a related investor call. There were statements made that give me the impression there may be a light at the end of the waiting-for-the-new-system tunnel.
The explanation for the delay of deployment for new customers was provided by Duane DeSisto, President, Chief Executive Officer and Director, beginning with the discussion of greater than anticipated interest from new customers resulting in greater demand than original expectations:
“With this significant uptick in demand we did make the decision to delay the transition of existing customers for approximately ninety days in order to build additional OmniPod supply. While the manufacturing process continues to improve we had an unexpected component issue that resulted in lower than planned production in the latter part of Q1. While this component issue was quickly identified and remedied…we determined it most prudent to build inventory to ensure that both manufacturing lines were operating efficiently before we commenced the transition of over 45,000 customers to the new OmniPod. At this point we expect that conversion to start in the next few weeks and we remain confident that nearly all customers will be transitioned by the end of the third quarter.”
Later on in the call when asked: “Do you have inventory levels today to support that transition, or do you think you will have that by the end of the month?” Answer was: “We will have inventory levels here in the next few weeks that we will start converting people.”
Other news:
As previously disclosed, Insulet has signed a development agreement with an unnamed CGM partner for the development of a sensor to be included in the OmniPod. Human trials are hoped to begin in early 2014. This would be make Insulet the only provider of a system with one product on the body and one handheld device for both insulin pump and CGM.
Listen to the entire call here.
Information is helpful. Thank you for sharing, Insulet. Keep it coming, please.
This is Caleb... 
Interesting. I was told a few days ago on the phone with customer service that it was another 3 to 6 months before they start transitioning the old customers. I wish Insulet would just give a date so we could start to trust them again. If it were me with diabetes I would absolutely not be using them anymore.
Thanks for the update about the combined CGM/OmniPod. It will be interesting if that turns out to be a competitive product with the Dex. My hesitation with a combined system is that sensors are often more reliable well past the 3 day mark and we’d have to be changing out the Pod every 3 days, so would the sensors every really be as accurate as a DexCom sensor? Time will tell…
Had they started transitioning current users first like proposed, they wouldn’t have had to make that decision 🙂
I stopped back in to see where things stood. Having “survivors guilt” because my daughter’s first shipment of pods (which will be the new ones, of course) is due to arrive today. I hope things go speedily for the veterans.
Hi Julie. I just commented separately with an update. I am hoping we will see the new system this week. Thanks for checking back in!
FYI: My daughter is an existing user of Omnipod and we just got the new system with her automatic reorder yesterday. We’re 24 hours in and so far it seems mostly the same. I think I need to tweak her correction factor to account for the new IOB math and we need to get used to the new confirmation screens but otherwise it seems fine. Pods are so cute and small. She is loving them. Hope you get yours soon.
Caleb has been using the new system since last Wednesday.
Historically, Insulet has relied upon a key contract manufacturing relationship for the key component of its pumps with a Singapore-based contract manufacturer named Flextronics International, Ltd. whose actual manufacturing ops are in China. Flextronics has historically been a very good partner; the Singapore management team keep tight reign on the entire process and controls it from start to finish, rather than relying on third-parties as is often the case in Chinese manufacturing. The inventory build-up is a function of the lead time before they can make the pumps and ship them across the Pacific Ocean and get it through its own domestic distribution channels. In any event, they have been transparent about the issue with investors which is a known risk of the company’s business model as more of a designer and distributor than an actual manufacturer. Investors don’t seem worried.
Thanks for the background, Scott!