Insulet on the move

Insulet on the move

Over the past few days Insulet (NASDAQ:PODD) the makers of the OmniPod wireless insulin pump has announced a series of management changes while at the same time revising 4th quarter earnings estimates. Speaking of the later according to a company issued press release; “the Company expects that revenue will be in the range of $71 to $73 million, versus prior estimates of $76 to $81 million. The Company expects growth in the fourth quarter of 2014 of approximately 10% from its U.S. direct diabetes business and approximately 40% from its international diabetes business compared to the same period last year. For the year ended December 31, 2014, the Company now estimates revenues to be in the range of $287 to $289 million, versus prior estimates of $292 to $297 million.”

This same release notes the reason for the revised revenue numbers is related to “a delay in shipments of its non-insulin drug delivery products from the fourth quarter of 2014 to the first quarter of 2015.”

The management changes at the company were also interesting as there is a noticeable lack of diabetes experience among this new team. Something Diabetic Investor actually considers a positive given how the insulin pump market is changing. As we have noted consistently while there are minor differences between insulin pumps all pumps do basically the same thing the same way. It’s also true that the insulin pump market is not large enough nor is it growing fast enough to support not just the existing players but the many who seek to enter this already overcrowded market. Finally given the coming transition changes to reimbursement pumps companies are beginning to realize that to prosper in the future they will have to do more than just sell hardware, that will have to sell diabetes management system which help produce better patient outcomes.

Insulet has already proven they can be innovative as they remain the only viable wireless option. Now the company and its new management team must prove they can deal with the changes that are taking place in the insulin pump market place. Changes which will require some out of the box thinking. Although some may disagree this is the reason we see this lack of diabetes experience as more positive than negative, as the new team will unencumbered by preconceived notions, they will not be living in the past and hopefully bring some ideas into the forefront.

As Diabetic Investor predicted when Patrick Sullivan took over, his job was to sell the company and these changes are further evidence of this mandate. Mr. Sullivan understands that for this to become a reality he must build a talented team who knows how to get the job done and aren’t tied to old notions about what this market is all about.

We are further encouraged that while shares took a hit with the earnings revision that the company didn’t wait and spring this news on everyone during an earnings call. This is a marked departure from the previous team who had a tendency to try and minimize missteps.

While it’s still early in Mr. Sullivan’s tenure we will repeat what we’ve said before – so far- so good.